Question 4 (hint: Use put call parity formula for part of the question) 1. Tata company has a European call and European put option on the stock XYZ. Today, the stock is trading at $41. The put option sells for 4 less than the call option. Call option and put option both expire in 4. the given strike price of both options is $57. Find out the annual effective risk-free interest rate. 2. A&B are two call option contracts and C&D are two put option contracts. A is a call option with a strike price of $74 and B with a strike price of $96.C is a put option with a strike price of $120 and D with $103. If the current price of the underlying assets is $100 for both the call option and put option. Find the worthiness of the values of the call option and put option. A: (1). The annual effective risk-free interest rate is 6.21%. (2). A and C is worth - $4 & -$3 respectively and B and D is worthless of - $26 and - $20 respectively. B: (1). The annual effective risk-free interest rate is 11.41%.(2). A and C is worth $26 & $20 respectively and B and D is worthless of $4 and $3 respectively. C: (1). The annual effective risk-free interest rate is 8.44%. (2). A and C is worth $20 & $26 respectively and B and D is worthless of $3 and $4 respectively. D: (1). The annual effective risk-free interest rate is 7.21%. (2). A and C is worth $174 & $220 respectively and B and D is worthless of -$4 and -$3 respectively