A European call option and put option on a stock both have a strike price of $20

Question:

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

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: