Question: Question 1: Derive the upper and lower bounds for the price of a call option. (Hint: Consider two portfolios, the first portfolio consists of one

Question 1: Derive the upper and lower bounds for the price of a call option.

(Hint: Consider two portfolios, the first portfolio consists of one call and some zero-coupon bond and the second portfolio consists of one stock)

Question 2: Discuss any three variables that affect option prices, providing some intuitive reasons for your answer. Consider one call and one put option.

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