Call option on jupiter motors stock

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Reference no: EM132028954

A call option on Jupiter Motors stock with an exercise price of $75 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $75 and one-year expiration is selling at $2.50.

If the annual risk-free rate is 2% and Jupiter pays no dividends, what should the stock price be?

Is there an arbitrage opportunity if the stock price is $73? If so, how to exploit it?

Reference no: EM132028954

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