A stock price with no dividends is $50 and the strike price of a 1-year European put option is $54. The risk-free rate is 5% (continuously compounded). Compute the lower bound for the put option such that there are arbitrage opportunities if the price is below the lower bound and no arbitrage opportunities if it is above the lower bound?

2. the language of price controls consider the market for rental cars. suppose that, in a competitive market without government regulations, the equilibrium price of rental cars is $58 per day, and employees at car rental companies earn $19.50 per hour. complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. statement price control effect there are many teenagers who would like to work at car rental companies, but the minimum-wage law sets the hourly wage at $23.00. the government has instituted a legal minimum price of $87 per day for rental cars. the government prohibits car rental companies from renting out rental cars for more than $87 per day.