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A non-dividend-paying stock currently sells for $305. The price of a two-year European call option on this stock with a strike price of $300 is
A non-dividend-paying stock currently sells for $305. The price of a two-year European call option on this stock with a strike price of $300 is $30. The risk-free rate is 3% per annum. The price of a European put option with the same expiration and the same strike price as the above call is $5. Is there an arbitrage? If so, nd the arbitrage strategy and its cash flows.
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