Lower bound of european put option prices

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Reference no: EM131501078

[Lower Bound of European Put Option Prices] Suppose that:

p = 5 S0 = 140

K = 150 r = 4%

T = 1

Given the above information on European put option price (p), spot price (S0), strike price (K), risk-free rate (r), and time-to-maturity (T), verify if there is an arbitrage opportunity. If there is an arbitrage opportunity, discuss how you can construct an arbitrage strategy using the above information.

Reference no: EM131501078

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