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Suppose you observe a European call option that is priced at less than the value Max[0, S0 - K(1+r)-T ]. What type of transaction should
Suppose you observe a European call option that is priced at less than the value Max[0, S0 - K(1+r)-T ]. What type of transaction should you execute to achieve the maximum benefit? Demonstrate that your strategy is correct by constructing a payoff table showing the outcomes of expiration.
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