Problem \#3: (20 points) A stock is trading at $105, you're long a 3-month American call with strike K=$100, and the risk-free rate is 5%. No dividends will be paid in the coming 3 months, and you have a strong feeling that the asset price will go down leaving the option OTM. Compare the following two strategies: a) Exercise the option and invest the proceeds. b) Short the asset, hold the option, and invest the proceeds. Which strategy is better? Show your computations. Problem \#3: (20 points) A stock is trading at $105, you're long a 3-month American call with strike K=$100, and the risk-free rate is 5%. No dividends will be paid in the coming 3 months, and you have a strong feeling that the asset price will go down leaving the option OTM. Compare the following two strategies: a) Exercise the option and invest the proceeds. b) Short the asset, hold the option, and invest the proceeds. Which strategy is better? Show your computations