Consider the European call option of a nondividend-paying

stock. Suppose that Pt = $20, K = $18, r = 6% per annum, and T

_ t = 0.5 year. If the price of a European call option of the stock is

$2.10, what opportunities are there for an arbitrageur?

Consider the put option of a nondividend-paying stock.

Suppose that Pt = $44, K = $47, r = 6% per annum, and T _ t =

0.5 year. If the European put option of the stock is selling at $1.00, what

opportunities are there for an arbitrageur?