Question: 4. Given a functional form for the instantaneous forward implied volatility f(t) f(t)=0.10+0.02t a) What is the 5 -year spot volatility? b) What is the

4. Given a functional form for the instantaneous forward implied volatility

4. Given a functional form for the instantaneous forward implied volatility f(t) f(t)=0.10+0.02t a) What is the 5 -year spot volatility? b) What is the average volatility between years 5 and 10 ? c) What is the delta of a 5-year ATM option with no dividends and zero riskfree rate? (No dividends) d) What happens to delta if the stock goes up 10% ? 4. Given a functional form for the instantaneous forward implied volatility f(t) f(t)=0.10+0.02t a) What is the 5 -year spot volatility? b) What is the average volatility between years 5 and 10 ? c) What is the delta of a 5-year ATM option with no dividends and zero riskfree rate? (No dividends) d) What happens to delta if the stock goes up 10%

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