Consider a call and a put on a non dividend paying stock; both for T = 1yr. The stock price is $45/share and K = $45/share for both options. The Call premium is equal to the put premium c = p = $7/share. The annual risk-free rate is 10%.

7.1 Use the put-call parity and show that there exists an arbitrage opportunity.

7.2 Show the complete table of cash flows and P/L at the options expiration of a strategy that will create the arbitrage profit in 2.1.