Answer Happy

Math finance problem:
Assume that the interest rate is 5%, continuously compounded
annually, and consider call and put options of both American and
European style expiring in 6 months on non-dividend paying stock.
For each of the following scenarios, check if you can find an
arbitrage opportunity and, if you can, describe it: (i) The strike
price of a European put option is $3 and the option is traded at
$4. (ii) The shares are traded at $3 and the American call option
is traded at $3.20.
Assume that the interest rate is 5%, continuously compounded annually, and consider call and put options of both American and European style expiring in 6 months on non-dividend paying stock. For each of the following scenarios, check if you can find an arbitrage opportunity and, if you can, describe it: (i) The strike price of a European put option is $3 and the option is traded at $4. (ii) The shares are traded at $3 and the American call option is traded at $3.20.