Problem 4. A financial product is composed of a 1-year bond and an European call option that matures in 1 year. The bond has principal $100 and gives out a coupon of $3 quarterly. The option has strike price of K = $100 and the underlying stock price now is $105. We assume the zero rates remains the same as 10%. First, describe what would happen at maturity. Then, provide a lower bound if we ask you to price this product. If the price for the product is $110, is there any arbitrage opportunity? If so, design the arbitrage and show you could make positive gain out of it. Round your answers to 2 decimal places. Problem 4. A financial product is composed of a 1-year bond and an European call option that matures in 1 year. The bond has principal $100 and gives out a coupon of $3 quarterly. The option has strike price of K = $100 and the underlying stock price now is $105. We assume the zero rates remains the same as 10%. First, describe what would happen at maturity. Then, provide a lower bound if we ask you to price this product. If the price for the product is $110, is there any arbitrage opportunity? If so, design the arbitrage and show you could make positive gain out of it. Round your answers to 2 decimal places