Question: Exercise 7.6 (Final Exam Problem, Spring Quarter 2021) Suppose that the price of a stock today is at $25. For a strike price of K

Exercise 7.6 (Final Exam Problem, Spring Quarter 2021) Suppose that the price of a stock today is at $25. For a strike price of K = $24 a 3-month European call option on that stock is quoted with a price of $2, and a 3month European put option on the same stock is quoted at $1.5 Assume that the riskfree rate is 10% per annum. (a) Does the putcall parity hold? (b) Is their an arbitrage opportunity? If yes, explain how the arbitrage strategy would look like

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