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Business, 09.11.2019 04:31 lukevader311

You are looking at options on dumbledore corporation with 14 months until expiration and a strike price of $85. the risk free rate for 14 months is 4.5% (annualized with continuous compounding). the firm is not expected to pay any dividends over the next 14 months, and the current stock price is $92.78. the price of the call option is $13.06 and the put option is $2.11. find the arbitrage trade given these prices and show the profit for each contract.

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