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Interest rates are 5%. A European call with a strike price of $50 and a maturity of one year is worth $6. A European put
Interest rates are 5%. A European call with a strike price of $50 and a maturity of one year is worth $6. A European put with a strike price of $50 and a maturity of one year is worth $7. The current stock price is $49. Which of the following is true? There is no mispricing and no arbitrage opportunity here a. To take advantage of this one would buy the put, buy the stock using borrowed funds and sell the call to make an automatic profit Oc. The call price is high relative to the put price d. The put price is high relative to the call price
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