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Identify the arbitrage opportunity open to a trader

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Reference no: EM133073936

A European call option and put option on a stock both have a strike price of $25 and an expiration date in four months. Both sell for $4. The risk-free interest rate is 6% per annum, the current stock price is $23, and a $1 dividend is expected in one month. Identify the arbitrage opportunity open to a trader.

Reference no: EM133073936

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