5) 20 points The current price of a stock is 165.38 dollars per share (S(t) = 165.38). The interest rate is 3% per year (with continuous com- pounding). The following table shows the prices of American put options for different strike prices. These options expire three months from today. Strike Option Price K Price PA 155 6.50 160 8.52 165 12.66 170 14.90 175 15.75 Find an arbitrage opportunity. To receive full credit, explain what you would do at time t = 0 and why the strategy that you propose is indeed an arbitrage oportunity. 5) 20 points The current price of a stock is 165.38 dollars per share (S(t) = 165.38). The interest rate is 3% per year (with continuous com- pounding). The following table shows the prices of American put options for different strike prices. These options expire three months from today. Strike Option Price K Price PA 155 6.50 160 8.52 165 12.66 170 14.90 175 15.75 Find an arbitrage opportunity. To receive full credit, explain what you would do at time t = 0 and why the strategy that you propose is indeed an arbitrage oportunity