You are looking at options on ravenclaw corporation with 13 months until expiration and a strike price of $50. the risk free rate for maturities between 1 and 13 months is 2.5% (annualized with continuous compounding). the firm is expected to pay a dividend of $1.20 each quarter over the next 13 months (i. e. a $1.20 dividend in 3, 6, 9 and 12 months), and the current stock price is $48.11. the price of the call option is $3.14 and the put option is $4.79. find the arbitrage trade given these prices and show the profit for each contract.

Asmall town wants to build some new recreational facilities. the proposed facilities include a swimming pool, recreation center, basketball court and baseball field. the town council wants to provide the facilities which will be used by the most people, but they face budget and land limitations. the town has $400,000 and 14 acres of land. the pool requires locker facilities which would be in the recreation center, so if the swimming pool is built the recreation center must also be built. also, the council has only enough flat land to build the basketball court or the baseball field. the daily usage and cost of the facilities (in $1,000) are shown below. which facilities should they build? facilityusagecost ($1,000)landswimming pool4001002recreation center5002003basketball court3001504baseball field2001005