The current price of a stock is $60. The one-year call option on the stock at a
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The current price of a stock is $60. The one-year call option on the stock at a strike of $60 is trading at $10. If the one-year rate of interest is 10%, is the call price free from arbitrage, assuming that the stock pays no dividends? What if the stock pays a dividend of $5 one day before the maturity of the option?
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