Suppose you observe a non-dividend-paying Stock X currently trading at $99 per share. For a strike price of $103, the current price of a European put option is $3, and the current price of a European call is $2.75. These options expire one year from today. Suppose you can borrow/lend at an annual rate of r_f = 3%.

(i) Describe the portfolio formation to take advantage of the arbitrage opportunity here.

(ii) What will be your net profit from this arbitrage?