What strategy should be taken to exploit arbitrage

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Reference no: EM132035010

A two-year European call option on a dividend-paying stock is currently selling for $10. The stock price is $84, the strike price is $80, and a present value of all future expected dividends is $2.

If the risk-free interest rate is 8% per annum for all maturities, continuously compounded, what strategy should be taken to exploit arbitrage opportunity, if there is any?

Reference no: EM132035010

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