Given that there are two put options with strikes at 40 and 50, with prices 3 and
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Given that there are two put options with strikes at 40 and 50, with prices 3 and 14, respectively, show the arbitrage opportunity if the option maturity is T and interest rates are r for this maturity.
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14350 The noarbitrage bound PK2 PK K K is violated here as we can see that 40 The ...View the full answer
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