Describe the appropriate arbitrage strategy

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If an American put is trading at $20 and an American call is trading at $16 where both options have identical terms. The underlying stock price is $115. The annual risk free rate is 9% and time to expiration is 6 months. the stock pays no dividend.

Q- Identify and describe the appropriate arbitrage strategy using appropriate quantitative methods as well as a theoretical explanation including a recommendation.

Reference no: EM131527975

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