Question: A current stock price is $50, and does not currently pay dividends. The one-year continuously compounded interest rate is 18.23%. The value of a one-year

A current stock price is $50, and does not currently pay dividends. The one-year continuously compounded interest rate is 18.23%. The value of a one-year call option with strike price $60 is $18, and the value of a one-year put option with strike price $60 is $22. a) Is there an arbitrage if these are European options? Explain. b) Is there an arbitrage if these are American options? Explain

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