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A Stock Is Selling for $18

Question 5

Multiple Choice

A stock is selling for $18.50.The strike price on a call,maturing in 6 months,is $20.The possible stock prices at the end of 6 months are $22.50 and $15.00.Interest rates are 6.0%.How much money would you borrow to create an arbitrage on a call trading for $2.00?


A) $2.54
B) $4.85
C) $6.60
D) $8.85

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