What does the payoff diagram look like for each strategy

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According to Yahoo! Finance, today CBS has both call and put options with exercise prices of $57.50 that expire on January 19th, 2017. Assume no dividends will be paid between now and expiration. The current stock price of CBS is $57.25 and the call option sells for $2.91. The annual risk-free rate is 1%. First, based on put-call parity what should be the value of the corresponding put option? What would be the appropriate arbitrate strategy and profit if the market value of the put =$4.20 today? What would be the appropriate arbitrage strategy and profit if the market value of the put =$2.50 today? What does the payoff diagram look like for each strategy?

Reference no: EM131889788

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