Explain the arbitrage opportunities

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Reference no: EM13688443

Stock TD sells for 54.50 now. The prices of a European call and European put on TD that expire in three months and have a strike price of $54 is 5.2. and $4.35, respectively. No dividend payment is expected. The continuously compounded risk-free interest rate is 6% per annum. Explain the arbitrage opportunities.

Reference no: EM13688443

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