easy · FRM Part 1 Valuation and Risk Models
If an investor observes that c + Ke^-rT > p + S_0, what is the appropriate arbitrage strategy to exploit this violation of the law of one price?
- Sell the fiduciary call and buy the protective put
- Buy the fiduciary call and sell the protective put
- Buy the stock and sell the call and put
- Short the stock and buy the call and put
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