Consider the following information on a stock and its option derivative prices. Assume the six-month interest rate is 5%. Do you spot any mispricing? What would you do to take advantage of it?

Stock X

Expiration (months) 6

Exercise Price 40

Share Price 50

Put Price 5

Call Price 17

Choose all actions you need to do, if there is a mispricing?

Group of answer choices

Sell the call

Borrow $38.10 at the risk-free rate

Buy the put

Buy the stock

There is no arbitrage opportunity

Buy the call

Invest $38.10 at the risk-free rate