Suppose European put and calls exist on the same stock, each with X = $75 and the same expiration date. The current stock price is $68. The current price of the put is $3.50 higher than that of the call, and a risk-free investment over the life of the options will yield 3%. (Put-Call Parity Arbitrage)

Based on the put-call parity, what is the theoretical relationship between put and call prices?

Is Put-Call Parity violated?

c. If the put-call parity is violated, devise a strategy that will earn risk-free arbitrage profits.