The current price of a piece of gold jewelry is 1380 the, Ask an Expert

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The current price of a piece of Gold jewelry is $1380. The annual risk free rate is 3 percent. A put option on the jewelry with an exercise price of $1390 and one year until expiration has a current value of $19.25. A call option on the jewelry with an exercise price of $1390 has a current value of $21.35 is there an arbitrage opportunity? If yes, what is the value of the arbitrage? Explain exactly how exploit the arbitrage.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93042204

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