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Arbitrage opportunities Assume that an American put option with time to expiry 1 year is worth $ 2 , while the otherwise identical put option

Arbitrage opportunities

Assume that an American put option with time to expiry

1

year is worth $

2,

while the otherwise identical put option but time to expiry

2

years is worth $

1 .

What should you do to earn at least $

1000

guaranteed profit?

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