21. A stock is trading at S = 50. There are one-month European calls and puts on the stock with a strike of 50. The call is trading at a price of CE = 3. Assume that the one-month rate of interest (annualized) is 2% and that no dividends are expected on the stock over the next month.
(a) What should be the arbitrage-free price of the put?
(b) Suppose the put is trading at a price of PE = 2.70. Are there any arbitrage opportunities?
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