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  3. suppose that s0 = $37, t = 6 months, r = 5%, and k

Suppose that S0 = $37, T = 6 months, r = 5%, and K =...

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Accounting

Suppose that S0 = $37, T = 6 months, r = 5%, and K = $40. Find the lower bound for the price of this European put option, and carefully explain an arbitrage strategy if PE = $1.00. Work with 10 options contracts and 1,000 shares of the underlying stocks for trade.

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