Explain in detail the arbitrage opportunities

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The price of a European call that expires in one year and has a strike price of $31 is $3. The underlying stock price is $31, and a dividend of $1 is expected in six months. The term structure is flat, with all risk-free interest rates being 10%.

Problem 1: What is the price of a European put option on the same underlying stock with the same maturity and strike price?

Problem 2: Explain in detail the arbitrage opportunities if the European put price is $3.2.

Reference no: EM132780595

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