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Explain the arbitrage opportunities in Problem if the European put price is $3.

Problem :

The price of a European call that expires in 6 months and has a strike price of $30 is $2. The underlying stock price is $29, and a dividend of $0.50 is expected in 2 months and again in 5 months.

The term structure is flat, with all risk-free interest rates being 10%. What is the price of a European put option that expires in 6 months and has a strike price of $30?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91993156

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