Which One of the Following Represents an Arbitrage Opportunity

question 10

Multiple Choice

Which one of the following represents an arbitrage opportunity?

• A) stock price of $18 and strike price of $20
• B) call price of $0.40 and put price of $0.40
• C) PCP-implied put price of $0.30 and call price of $0.28
• D) PCP-implied put price of $0.30 and put market price of $0.31
• E) PCP-implied call price of $0.20 and a put market price of $0.22

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Definitions:

Value Outlet

A retail store that offers products at lower prices by reducing overhead costs and offering goods that provide value for money.

Focused Merchandise Stores

Retail outlets that specialize in a specific type of product or market niche, aimed at catering to specific customer needs.

Specialty Discount Retailer

Retailers that focus on selling a specific category of products at reduced prices, often offering large selections in their niche.

Category Killer

A large retail store specializing in a specific product category, so dominant that it drives out or "kills" smaller competitors.