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The price of a stock, which pays no dividends, is $58.2 and the strike price of a one year European call option on the stock
The price of a stock, which pays no dividends, is $58.2 and the strike price of a one year European call option on the stock is $45. The risk-free rate is 8.8% (continuously compounded). What is a lower bound for the option such that there are arbitrage opportunities if the price is below the lower bound and no arbitrage opportunities if it is above the lower bound?
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