SAT, 23.12.2021 08:30 caleb1009

The price of a stock, which pays no dividends, is $30 and the strike price of a one year european call option on the stock is $25. The risk-free rate is 4% (continuously compounded). Which of the following is a lower bound for the 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?.

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The price of a stock, which pays no dividends, is $30 and the strike price of a one year european ca...

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