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Suppose the call price is $14.10 and the put price is $9.30 for stock option where the exercise price is $100, the risk free rate
Suppose the call price is $14.10 and the put price is $9.30 for stock option where the exercise price is $100, the risk free rate is 5 percent (continuously compounded), and the time to expiration is one year. Explain how you would make a synthetic stock position and identify the cost. Suppose you observe a $100 stock price; identify any arbitrage opportunity. (Show the problem solving steps)
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