Suppose the S&P 500 futures price is 1000, = 30%, = 5%, = 5%, = 1, and = 3. a. What are the prices of European calls and puts for = $1000? Why do you find the prices to be equal? b. What are the...

Suppose the S&P 500 futures price is 1000,

= 30%,

= 5%,

= 5%,

= 1, and

= 3.

a. What are the prices of European calls and puts for
= $1000? Why do you find the prices to be equal?

b. What are the prices of American calls and puts for
= $1000?

c. What are the time-0 replicating portfolios for the European call and put?