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Problem 5. Let C be the price of a call option to purchase a security whose present price is S. Argue that CS Hint: Compare

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Problem 5. Let C be the price of a call option to purchase a security whose present price is S. Argue that CS Hint: Compare the two investments: 1. purchase the option at time 0; 2. purchase the security at time 0. Then explain that if C > S there is an arbitrage opportunity by selling 1st investment and buying And investment

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