The price of a call option on a stock XYZ with exercise price $40 and maturity 1 year is $3, a corresponding put trades at $7, the current stock price is $35 and the continuously compounded interest rate is 5%. b) Can you make arbitrage profit given the above prices? If so, outline the details of your strategy. c) Consider a forward contract on a stock XYZ with delivery price $40 and delivery date in 1 year. What is the value of the contract today? Assuming that it is the put option on XYZ that is mispriced, what is the value of the flexibility to walk away from the forward agreement before the delivery date? Interpret your result.