A European Call on OPSY Stock with a Strike Price

question 10

Multiple Choice

A European call on OPSY stock with a strike price of $22.50 is worth $1.75.Let the present value of the strike price be $22.25.A European put on the stock with identical terms is worth the same.If the price of OPSY stock is $22,the arbitrage profit that you can create today by trading the stock and other related securities is:

• A) $0.25
• B) $0.50
• C) $0.75
• D) $1
• E) None of these answers are correct.

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Definitions:

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