A stock priced at $70 has a standard deviation of 30%. 1-year calls and puts with an exercise price of $65 are available. The calls have a premium of $13. The risk-free rate is 6% per year. a) What must be the theoretical price of a 1 year put option with an exercise price of $65? b) You observe that a 1-year put option with an exercise price of $65 costs $3. What will be your arbitrage profit? Explain how you may construct a riskless arbitrage to exploit the mispriced put