Construct an arbitrage from given situation

Reference no: EM131453795

Question: A European call with a maturity of 6 months and exercise price X = 80 is written on a stock whose current price is 85 is selling for $12.00; a European put written on the same stock with the same maturity and with the same exercise price is selling for $5.00. If the annual interest rate (continuously compounded) is 10%, construct an arbitrage from this situation.

Reference no: EM131453795

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