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Business, 18.03.2021 01:50 kk042563

a - Suppose that the stock price is $29, the risk- interest rate is 10% per year, the price of a 4-month European call option is $2.75, and the price of a 4-month European put option is $2.25. Both options have the strike price $28. Describe an arbitrage strategy and justify it with appropriate calculations. Please write your solution in complete sentences. B- Use the same data as in part (a), but suppose now that the call price is $3.25 and the put price is $1. Is there still an arbitrage opportunity? Describe an appropriate strategy and justify it with appropriate calculations. Please write your solution in complete sentences

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a - Suppose that the stock price is $29, the risk- interest rate is 10% per year, the price of a 4-m...
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