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The price of H&B stock is currently $50. The options market currently offers 3-month European calls and puts at a strike price of $50 for
The price of H&B stock is currently $50. The options market currently offers 3-month European calls and puts at a strike price of $50 for c = $2.50 and p = $1.50. The continuously-compounded annual interest rate is 4%. What are the arbitrage profits you can make (per unit of stock replicated)?
a. $2.0025
b. $0.5025
c. $1.5025
d. $0.9605
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