You gather the following information from the Wall Street Journal: Intel's stock is selling for $17, the risk-free rate is 3% and a put option on Intel is selling for $4.00 matures in one year and has an exercise price of $20.

a.Calculate the equilibrium value of a call option on Intel that has an exercise price of $20 and matures in one year.

b.You observe in the WSJ that the above call option is selling for $1.25.Is the market in equilibrium?If not, then pure arbitrage.(Hint to be a pure arbitrage you must show that there was zero net investment and a guaranteed profit.)

c.You observe in the WSJ that the above call option is selling for $2.00.Is the market in equilibrium?If not, then pure arbitrage.(Hint to be a pure arbitrage you must show that there was zero net investment and a guaranteed profit.)