Question: Suppose a long put option is trading at $3.50. Using the Black-Scholes formula, you believe the correct price should be $3.42. Which of the following

Suppose a long put option is trading at $3.50. Using the Black-Scholes formula, you believe the correct price should be $3.42. Which of the following is an important position in the arbitrage strategy at time 0?

Short put option

Long put option

Long call option

Short call option

Borrow at the risk-free rate

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