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2. An asset is trading for $45. Three month American 40 calls and puts are selling for $7 and $3, respectively. The risk free

2. An asset is trading for $45. Three month American 40 calls and puts are selling for $7 and $3, respectively. The risk free rate is 10% per annum. Specify an arbitrage strategy and the gain you could make. Justify your answer.

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