Options [4] A put is worth $10 and matures in one year. A call on the same

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Options [4]

A put is worth $10 and matures in one year. A call on the same stock is worth $15 and matures in one year also. Both options are European. The put and call have the same exercise price of $40. The stock price is $50. The current price of a (risk free)

discount bond (zero coupon bond) paying $1 that matures in one year is $0.90. How do you make risk free profits given these prices?

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Lectures On Corporate Finance

ISBN: B00RGENH5I

1st Edition

Authors: Peter L Bossaerts ,Bernt Arne Odegaard

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