Given the following variables: S = $50, E = $45, T = 1 year, r = 2 %, and P = $5; if the call option is selling for $11 (C = $11), what arbitrage opportunity exists? Outline the strategy and the profit to be realized
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Given the following variables: S = $50, E = $45, T = 1 year, r = 2 %, and P = $5; if the call option is selling for $11 (C = $11), what arbitrage opportunity exists? Outline the strategy and the profit to be realized.
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