2. (10 pts) The initial price of the stock is So 17. A company Not Very Smart Bank Made Solely for The Purposes of This Problem hopes to make money by trading the European call options on this st...
financial PROBLEM 2. 14 pointsl European call and put options with exercise price $22.5 and expiration time in six months are trading at $4.12 and $7.42. The price of the underlying stock is $19.32 and the interest rate is 4.15%. Find an arbitrage opportunity, describe the arbitrage strategy, calculate the arbitrage profit. Provide the details. PROBLEM 2. 14 pointsl European call and put options with exercise price $22.5 and expiration time in six months are trading at $4.12 and $7.42....