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Question III: (a) Verify that the price of a European call is $16.196. (b) Suppose you observe a call price of $17. What is the

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Question III: (a) Verify that the price of a European call is $16.196. (b) Suppose you observe a call price of $17. What is the arbitrage ? (c) Suppose you observe a call price of $15.50. What is the arbitrage? Question III: (a) Verify that the price of a European call is $16.196. (b) Suppose you observe a call price of $17. What is the arbitrage ? (c) Suppose you observe a call price of $15.50. What is the arbitrage

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