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What is the price of the associated call option

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Reference no: EM131968815

Mac stock currently sells for $64.00. A 9-month put option with a strike of $68.00 has a price of $5. Assume a 2% continuously compounded risk-free rate and a 0% continuous dividend yield.

a) What is the price of the associated call option?

b) Show the potential arbitrage strategy if the price of the call option is $5.

Reference no: EM131968815

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