Identify the arbitrage opportunity open to a trader

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Question: A European call option and put option on a stock both have a strike price of $32 and an expiration date in four months. Both sell for $4.20. The risk-free interest rate is 4.65% per annum, the current stock price is $29.55, and a $1.30 dividend is expected in two months. Identify the arbitrage opportunity open to a trader.

Reference no: EM131971047

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