$1.$ Let the current spot rate be $$1\mathrm{.}25/,$ and assume that one month from now the spot rate will be either $$1\mathrm{.}30/$ or $$1\mathrm{.}20/.$ Let the dollar interest rate be $0\mathrm{.}4\%$ per month, and let the euro interest rate be $0\mathrm{.}3\%$ per month. Develop a portfolio that replicates the payoff on a one$-$month euro call option with a strike price of $$1\mathrm{.}25/.$ What is the corresponding price of the euro put option with the same strike price? The contract size is CHF $125,000.$ You established a margin account with an initial margin of $$2,000.$ The maintenance margin is $$1,400$

$2.$ Suppose that the price of the euro call option in Problem $1$ was $$0\mathrm{.}03/.$ How would you arbitrage between the market in risk$-$free assets and the foreign currency options market? What would you do if the price of the call option were $$0\mathrm{.}02/?$ Notice that the contract is $31,250$

Can you please answer the second question $($I included question $1$ because you need the answer in order to answer the second question.$)$