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The price of a stock, which pays no dividends, is $150 and the strike price of a one year European call option on the stock
The price of a stock, which pays no dividends, is $150 and the strike price of a one year European call option on the stock is $130. The annual risk-free rate is 4% (continuously compounded). Find the lower bound for the option price such that there is no arbitrage opportunity if the market price of the option is above this lower bound.
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