The question does not come with a formula. I have attached answers provided by the other expert for questions a-d. If you could go through this and complete the rest of the questions.

* Please answer the following questions. These questions are a continuation from my last post. Since Chegg policy allows for 4 questions at a time, the first 4 (a-d) has already been answered. I have now posted the remaining 3.

e ) Demonstrate how you could make arbitrage profits when a trader quotes a put price of $3.

f) Calculate the value of the put option using risk-neutral valuation.

g) Show the values of call and put options in (c) and (f) satisfy the put-call parity.

Information given in in the question : d Se 100 T = 0.25 0.9 r = 2.1 KE 100 Payoff call pay off put 100 90 10 10 pay off can be a replicated using & shares & y cash at time T P -0.5 Y -45 10 110 $ + v 90f +/4 20 p 1000 + $5.22 C = C = Y ert C: b) $7 Corkflow : 7 - 100 % 1.78 Y est AXD:25 1 0.525 d q u-d - XD-25 C = e [10 + q + 0(1-q)] $5:22 2 Replicating payoff y cash at time I 0 1100 ty 900 + 4 uring of shares & 10 - 10 - 20 0 o -0.5 55 -EX0-25 P 100 p + y e $4.726 19 Binomial tree and option pricing. A stock's price S is $100. After three months, it either goes up and gets multiplied by the up factor U = 1.10, or it goes down and gets multiplied by the down factor D= 0.90. Options mature after T = 0.25 years and have a strike price K = 100. The continuously com- pounded interest rate is 2% for all maturities. Answer the following questions. (a) Calculate the value of the call option using no arbitrage valuation. (b) Demonstrate how you could make arbitrage profits when a trader quotes a call price of $7. ) Calculate the value of the call option using risk-neutral valuation. (d) Calculate the value of the put option using no arbitrage valuation. (e) )Demonstrate how you could make arbitrage profits when a trader quotes a put price of $3. (f) Calculate the value of the put option using risk-neutral valuation. (g) Show the values of call and put options in (c) and (f) satisfy the put-call parity