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Suppose there are 3 call options traded on a stock with strike prices equal to...

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Finance

Suppose there are 3 call options traded on a stock with strike prices equal to 40, 50 and 60 and with prices C(40) = 8, C(50) = 6, C(60) = 2. Show that prices allow for arbitrage and provide an arbitrage portfolio with initial price equal to zero.

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