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Arbitrage 2 . Suppose that Call premium = $ 9 Spot price of asset = $ 2 0 Time to maturity = 1 r =

Arbitrage

2 .

Suppose that

Call premium

=

9

Spot price of asset

=

20

Time to maturity

= 1

r = 10 %

Strike price

K =

18

The asset pays no dividend.

Write down the full arbitrage steps. What is the profit $$ amount

?

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