ONLY PART C and D

There exist call and put options on one share of Options'R'Real Inc. (ORR). Each option is EUROPEAN, expires exactly one year from today, has an exercise price of $45 per share, and has a premium of $3 per share. The current share price of ORR is $45, and ORR never pays dividends. Assume that taxes and transaction costs, including short selling costs, are zero. a) You buy one share of ORR, buy one European put option on ORR, and write one European call option on ORR. Using the data above calculate your cash flow on expiration day. How does your cash flow on expiration day depend on the stock price on expiration day? EXPLAIN (2 points) b) Suppose that the riskless interest rate over the period until expiration is zero. Are the options priced correctly? (2 points) c) Suppose that the riskless interest rate over the period until expiration is zero. The put price is $2.50 per share and the call price is $3.50 per share. Can you buy a synthetic CALL option for less than $3.50? If yes, construct the strategy and calculate the price of the synthetic call. How much money did you save relative to buying the call directly? (2 points) d) Suppose that the riskless interest rate over the period until expiration is zero. The put price is $3.50 per share and the call price is $2.50 per share. Can you buy a synthetic PUT option for less than $3.50? If yes, construct the strategy and calculate the price of the synthetic put. How much money did you save relative to buying the put directly? (2 points)