Consider the following European call options on an asset which pays no dividends. The continuous risk-free rate is 10% and both options will expire in one year. Call with K+ = 90 traded at C1 = $8 Call with K2 = 92 traded at C2 = $5 Use no arbitrage relations (Hint: use monotonicity) to find an arbitrage opportunity. Then build an arbitrage portfolio (and by calculations and brief explanation) show that the portfolio is actually an arbitrage. Consider the following European call options on an asset which pays no dividends. The continuous risk-free rate is 10% and both options will expire in one year. Call with K+ = 90 traded at C1 = $8 Call with K2 = 92 traded at C2 = $5 Use no arbitrage relations (Hint: use monotonicity) to find an arbitrage opportunity. Then build an arbitrage portfolio (and by calculations and brief explanation) show that the portfolio is actually an arbitrage