Is there an arbitrage profit opportunity here

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Question 1: On January 11, 2005, I purchased a straddle on GE with exercise price of $50 and March 15, 2005 maturity when GE was selling for $55 at a total cost of $11. On January 21, 2005, GE falls to $45 and I decide to close my position by exercising my options. Compute my profit/loss.

Question 2: Suppose that you noticed the following prices: C=$12; S=$60; X=$50, for a one year European call option. The simple risk-free interest rate is 10% per year. Is there an arbitrage profit opportunity here? Yes or no? If yes, how would you exploit it? If no, explain why not.

Reference no: EM133300913

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