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A European call option and put option on a stock both have a strike price of...

A European call option and put option on a stock both have a strike price of $20 and an expiration date in three months. Both sell for $3. The risk-free interest rate is 10 % per aunum, the current stock price is $19 , and a $1 dividend is expected in one month. identify the arbitrage oppotunity to a trader.

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Answer #1

This is a question of put call parity.

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