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A stock price (which pays no dividends) is $50 and the strike price of a two-year European put option written on the stock is $60.

A stock price (which pays no dividends) is $50 and the strike price of a two-year European put option written on the stock is $60. The risk-free rate is 5% per annum (continuously compounded). Which of the following is a lower bound for the option such that there are arbitrage opportunities if the price is below the lower bound and no arbitrage opportunities if it is above the lower bound?

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