13. You happen to be checking the newspaper and notice an arbitrage opportunity. The current stock price

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13. You happen to be checking the newspaper and notice an arbitrage opportunity. The current stock price of Intrawest is $20 per share and the one-year risk-free interest rate is 8%. A one-year put on Intrawest with a strike price of $18 sells for $3.33, while the identical call sells for $7. Explain what you must do to exploit this arbitrage opportunity.

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Fundamentals Of Corporate Finance

ISBN: 9781292018409

3rd Global Edition

Authors: Berk, Peter DeMarzo, Jarrad Harford

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