Question
A stock that does not pay a dividend is trading at $73.5. A riskless bond that will pay $100 after a year is trading at
A stock that does not pay a dividend is trading at $73.5. A riskless bond that will pay $100 after a year is trading at $97. A European call option on the stock with strike price of $65 and one year to maturity is trading at $5.0. Propose an arbitrage strategy and prove that it is an arbitrage strategy. Write your answer in the space provided for the next question.
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Corporate Finance Text And Cases
Authors: Vishwanath S. R.
3rd Edition
9353282896, 978-9353282899
