Consider two european call options

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Reference no: EM131989892

Consider two European call options, Call 1 and Call 2. Both have the same time to expiration and are written on the same underlying stock. Call 1 trades for $5.00 and has an exercise price of $120. Call 2 has an exercise price of $110. If Call 2 is priced at $17, an arbitrage becomes available. Explain.

Reference no: EM131989892

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