Problem ARB-47 LR2022-11 We consider two European put options, both on XYZ stock and both expiring at the same "time T ". With our usual notation, a price relationship (which is not in our list) is as follows: 4p(0,T,30)3p(0,T,40). Now suppose you observe the following prices as in the table below. The continuously-compounded interest rate (using a 365-day year) is 3%. Suppose time T is one year from now. (Actually, this is not needed, except if you wish to move money between time 0 and time T.) Demonstrate how one can obtain arbitrage profits. Signs: Problem ARB-47 LR2022-11 We consider two European put options, both on XYZ stock and both expiring at the same "time T ". With our usual notation, a price relationship (which is not in our list) is as follows: 4p(0,T,30)3p(0,T,40). Now suppose you observe the following prices as in the table below. The continuously-compounded interest rate (using a 365-day year) is 3%. Suppose time T is one year from now. (Actually, this is not needed, except if you wish to move money between time 0 and time T.) Demonstrate how one can obtain arbitrage profits. Signs