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Explain in detail the arbitrage opportunities

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Question - The price of a European call that expires in six months and has a strike price of $50 is $2. The underlying stock price is $49, and a dividend of $1.50 is expected in three months. The term structure is flat, with all risk-free interest rates being 9%.

Explain in detail the arbitrage opportunities if the European put price is $3.30.

Explain in detail the arbitrage opportunities if the European put price is $1.10.

Reference no: EM132939980

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