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A european call and put both have a strike price of $20 and will expire in 3 months . Both sell for $3. Assume the
A european call and put both have a strike price of $20 and will expire in 3 months . Both sell for $3. Assume the annual interest rate is 12%, the current stock price is $19 and the continuously compounded dividend yield is 5%. What opportunities are available to an arbitrageur? Please describe your strategies and calculate the cash flow.
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