Consider a European put and a European call option, which are both written on a non-dividend paying stock, have the same strike price K=100 and expire in T=8 months. These options are trading for p=13 and c=15.31. respectively. The underlying stock price is S0=90. The continuously compounded risk-free rate of interest is r=14% per annum. Which of the following statements is correct? The put-call parity is NOT violated and hence, there is NO arbitrage opportunity. The present value of the arbitrage profit is STRICTLY GREATER than 3.41. We have an arbitrage opportunity because we can construct a portfolio that earns a profit today and zero cash flow in t=8 months. The arbitrage strategy is: Buy the call, buy a bond that pays 100 in 8 months, sell the put and sell the stock. Hint: Consider the put-call parity