Using the call put parity , compute the value of a 9 month European put on a stock with current price of US$ 25 and strike price of US$ 27, where the value of an European call on the same stock and with the same strike price is US$ 2 5 and the rf equals 10 annual Based on your previous answer, if the market price of the put is US$ 2 35, identify the existence of an arbitrage opportunity and explain how you can profit from it

Question: Using the call-put parity , compute the value of a 9-month European put on a stock with current price of US$ 25 and strike price

Using the call-put parity, compute the value of a 9-month European put on a stock with current price of US$ 25 and strike price of US$ 27, where the value of an European call on the same stock and with the same strike price is US$ 2.5 and the rf equals 10% annual.

Based on your previous answer, if the market price of the put is US$ 2.35, identify the existence of an arbitrage opportunity and explain how you can profit from it.

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