Question: Question 5 (5 marks) We consider the following options strategy on a stock and its total payoff at the expiry date of option #3

Question 5 (5 marks) We consider the following options strategy on a stock and its total payoff at the expiry date of option #3 O tion 2 3 Position Lon x 2 Short x 3 Lon x 1 Remainin 0.25 life Call Call Call Strike 100 120 140 m For the options with a remaining life, we use BSM model to values. We assume a volatility of 23% and a risk-free rate of (a) Compute the total payoff for S = 80, 120 and 16 (b) Use Excel to draw the payoff pattern for prices be with a step of $10. (3 marks) heir n $40 and $240

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