Tony Smith believes that the price of a particular underlying, currently selling at $93 , will increase substantially in the next six months, so he purchases a European call option expiring in six months on this underlying. The call option has an exercise price of $95 and sells for $ 1.50 .

a) How much is the current credit risk, if any? (Hint: European option canbe exercised onlyat theexpirationdate of the option.) b) How much is the current value of the potential credit risk, if any? c) Which party bears the credit risk(s), TonySmith or the seller?