The price of a nondividend paying stock is $100 and the continuously compounded risk free rate is 5% (i.e. e^(.05*t)) A 1 year European Call option with a strike of $100 * e^.05*1 = $105.127 has a premium of $11.924. A 1.5 year European call option with a strike price of $100 * e^(.05*1.5) = $107.788 has a premium of $11.50.
Demonstrate an arbitrage opportunity