# You are given: (i) The price of a nondividend-paying stock is $31. (ii) The continuously compounded risk-free

## Question:

You are given:

(i) The price of a nondividend-paying stock is $31.

(ii) The continuously compounded risk-free interest rate is 10%.

(iii) The price of a 3-month 30-strike European call option is $3.

(iv) The price of a 3-month 30-strike European put option is $2.25. Construct a trading strategy that will generate risk-free arbitrage profits at time 0.

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## Step by Step Answer:

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