These are the finance questions, please answer full questions. Red marked statements are the questions. Thanks

00000 AT&T LTE 2:08 PM (9} 9' 76% -. venus.cs.qc.edu prmrmwm any;- 3 Question 3 o For each case below, you are the trader on the opposite side of the trade with me at time to(: 0). For each case below, state the trade you will perform with me at time to(= 0). For each case, you must explain the reason for your trading decision. In all cases, both you and I begin with a portfolio of zero (no cash, no stock, options, etc). 1. Money required to buy things must be borrowed from me. Interest must be paid on the loan. . Money received by selling things is loaned to me. I will pay interest on the savings. . The borrow and lend interest rates are equal. Both are equal to the risk-free rate. . There is no limit on the quantity to buy or sell anything. including short selling of stock. In all the cases below: . The current value of the stock price is So : 100. . The stock does not pay dividends. . For questions involving a stock index, the current value of the index is 1000 points. . The stock index has a continuous dividend yield of 1.5%. . The interest rate is 5% (borrow and lend rates are equal}. . All the options have the same expiration time of 1 year. . All the forward/futures contracts have the same expiration time of 1 year. o See next page. 00000 AT&T LTE 2:08 PM (9} 0' 76% -. venus.cs.qc.edu More... Open in \"iBooks" 3.2 n A portfolio consists of: (a) long one European call, (b) short one European put, (c) short one forward contract. Both the call and the put have the same strike price of K : 96. The forward price is K 1 = 95. 3.2.1 The portfolio trades at a price of 1. State which position (long/short) you will take, to trade this portfolio with me at time to. Explain the reason for your trading decision. 3.2.2 The portfolio trades at a. price of 0.9. State which position (long/short) you will take, to trade this portfolio with me at time to. Explain the reason for your trading decision. 3.2.3 The portfolio trades at a price of 1.1. State which position (long/short) you will take, to trade this portfolio with me at time to. Explain the reason for your trading decision