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Suppose the current stock price is $100, the exercise price is $100, the annually compounded interest rate is 5%, the stock pays a $1 dividend
Suppose the current stock price is $100, the exercise price is $100, the annually compounded interest rate is 5%, the stock pays a $1 dividend in the next instant, and the quoted call price is $3.50 for a one-year option. Identify the appropriate arbitrage opportunity and show the appropriate arbitrage strategy.
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