A stock sells for $52 per share, and the 6-month European call on the stock with a
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Question:
A stock sells for $52 per share, and the 6-month European call on the stock with a strike price of $50 sells for $2.50. The stock is not expected to pay any dividends in next six months. The risk free interest rate is 4% per annum, continuously compounded. How can you get a risk free arbitrage from the market? Describe your transactions clearly.
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