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  3. 1-year put option on the same stock with an exerci

1-year put option on the same stock with an exercise price of $35 costs $2.1,...

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Finance

  1. 1-year put option on the same stock with an exercise price of $35 costs $2.1, the stock price is $33 and the interest rate on a bank deposit per annum is 10%. a) Use the put-call parity relation to calculate the price of a 1-year European call option on the same stock.

    b) If the market price of the call option is $4, is there an arbitrage opportunity? c) If so, define arbitrage strategy.

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