You are looking at a european call option and a european


You are in a situation that you suspect there is an arbitrage opportunity with options you are studying.

You are looking at a European call option and a European put option on a stock in which both have an exercise prices of $20 and 3 months to expiration.

They both happen to sell for $3 and the risk-free interest rate is 10% per annum.

If the current stock price is $19 and a $1 dividend is expected in one month, describe the arbitrage opportunity confronting you.

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Financial Management: You are looking at a european call option and a european
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