Problem

11. The following three call option prices are observed in the market, for XYZ stock: Typ...

11. The following three call option prices are observed in the market, for XYZ stock:

TypeStrikeOption Price
Call5010
Call607
Call702

Are these prices free from arbitrage? How would you determine this? Ifthey are incorrect, suggest a strategy that you might employ to make sure profits.

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Solutions For Problems in Chapter 9