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Suppose the price of a stock is $28, the risk-free interest rate is 10%, and the price of a European call option on the stock

Suppose the price of a stock is $28, the risk-free interest rate is 10%, and the price of a European call option on the stock with a one-year expiration and a strike price of $26 is $5.

Part a.

What is the arbitrage opportunity if the stock does not pay dividends?

Part b.

What is the arbitrage opportunity if the stock pays $2 dividends per year? The dividends are paid at the end of the year.

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