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Consider three calls on the same stock (that pays no dividends) that differ only in their strike prices. The strike prices are K1=35

Can you rank wC(K1)+(1-w)C(K3) and C(K2)?

You are informed that the market prices of these calls are as follows: C(K1)=5.50, C(K2)=3.85 and C(K3)=1.50

Are these correctly priced in the market relative to each other?

Is there anything for you to do?

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