Consider a put and a call, both on the same underlying stock that has present price of $61. Both options have the same identical strike price of $60 and time-to-expiration of 215 days. Assume that there are no dividends expected for the coming year on the stock, the options are all European, and the interest rate is 5%. If the put premium is $3.00 and the call premium is $8.00, which portfolio would yield arbitrage profits? Hint: Check your answer with an arbitrage table.
A. buy the put , buy the call, sell stock, sell a bond
B. buy the stock, buy the bond, write the put, write the call
C. buy the call, buy a bond, write the put, sell stock
D. buy a put, buy stock, write the call, sell bond
E. no arbitrage is available for these asset prices