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The current price of a stock is $60.The one-year European call option on the stock at a strike price of $50 is currently trading at

The current price of a stock is $60.The one-year European call option on the stock at a strike price of $50 is currently trading at $10.Assume the one-year interest rate is 10% (based on continuous compounding).

a.Explain whether the trader can engage in arbitrage?

b.If so, what positions would the trader take and what profit might it make at expiration?

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