1. A one-month European put option on a non-dividend-paying stock is selling for $2.80. The stock price is $47, the strike price is $50, and the risk-free interest rate is 6%.

a) (1 point) Is there an arbitrage? If so, describe your strategy and compute your profit.

b) (1 point) If the option is an American put instead, is there an arbitrage? If so, describe your strategy and compute your profit.