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Question II: The price of a non-dividend-paying stock is $100 and the continuously compounded risk-free rate is 5%. A l-year European call option with a

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Question II: The price of a non-dividend-paying stock is $100 and the continuously compounded risk-free rate is 5%. A l-year European call option with a strike price of $100 x ex1 1 year European call option with a strike price of $100 x ex15 = $107.788 has a premium of $11.50 Demonstrate an arbitrage $105.127 has a premium of $11.924. A Question II: The price of a non-dividend-paying stock is $100 and the continuously compounded risk-free rate is 5%. A l-year European call option with a strike price of $100 x ex1 1 year European call option with a strike price of $100 x ex15 = $107.788 has a premium of $11.50 Demonstrate an arbitrage $105.127 has a premium of $11.924. A

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