(Solution Download) The price of a stock that does not pay dividends


The price of a stock that does not pay dividends is currently $35, and the risk-free rate is 4 percent. A European call option on the stock, with a strike price of $35 and which expires in six months, sells for $3.04. A European put option on the same stock with the same strike price sells for $2.35. Is there an arbitrage opportunity here? If so, what is it?

 







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