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8 ( a ) A put option on Vauxhall shares is selling for the equivalent of 2 in the UK with an exercise price of

8(a) A put option on Vauxhall shares is selling for the equivalent of 2 in the UK with an exercise price of 60. In France, the same option is selling for 2. However, its exercise price is 62. Show how you can use a pure arbitrage strategy that exploits this difference. Explain your strategy, draw the payoff diagram and explain what the payoffs are.

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