Question: Example: Consider a put and a call option on a stock, with a strike price of $40 and expiration in 3 months. The price of

Example: Consider a put and a call option on a stock,

Example: Consider a put and a call option on a stock, with a strike price of $40 and expiration in 3 months. The price of the call is $4.50, the price of the put is $2.50. The risk-free interest rate is 6% (annual), and the underlying stock price is $42. - Is there a violation of put-call parity? - Identify an arbitrage strategy to exploit the violation

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