Opportunity open to trader and quantify arbitrage profit

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Reference no: EM131548979

A European call option and a put option on a stock both have a strike price of $30 and an expiration date in three months. Both options sell for $3.00. The risk-free rate is 8% per annum, the current stock price is $28, and a $1 dividend is expected in two months. Identify the arbitrage opportunity open to a trader, and quantify the arbitrage profit.

Reference no: EM131548979

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