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How can you arbitrage the position

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Reference no: EM133305932

Part A

XYZ's stock currently sells for $48. A one-year call option with a strike price of $55 sells for $9, and the risk-free interest rate is 6%. What is the price of a one-year put with a strike price of $55?

Part B

If a call is selling for $6.50 when the true price calculated from a binomial tree is $6.06, how can you arbitrage the position? (show all work)

Reference no: EM133305932

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