A call option on jupiter motors stock with an exercise, Ask an Expert

Finance

A call option on Jupiter Motors stock with an exercise price of $75 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $75 and one-year expiration is selling at $2.50.

A) If the risk-free rate is 2% and Jupiter pays no dividends, what should the stock price be?

B) Is there an arbitrage opportunity if the stock price is $73? If so, how to exploit it?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92344073

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