Question: A stock that does not pay dividend is trading at $71.6. A riskless bond that will pay $100 after a year is trading at $98.

A stock that does not pay dividend is trading at $71.6. A riskless bond that will pay $100 after a year is trading at $98. A European call option on the stock with strike price of $65 and one year to maturity is trading at $5.1. Propose an arbitrage strategy and prove that it is an arbitrage strategy. Write your answer in the space provided for the next question.

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