Q

$2$

$.$

$$Underlying priced at

$1$

$0$

$0$

$0$

$$follows a uniform distribution with a MAD of

$2$

$0$

$0$

$.$

$($

$1$

$5$

$$points

$)$

Q

$2$

a

$.$

$$What is the probability of option expiring ITM for a

$1$

$1$

$0$

$0$

$$PUT$?$

$($

$3$

$$points

$)$

Q

$2$

b

$.$

$$What is the average underlying price when PUT expires ITM?

$($

$3$

$$points

$)$

Q

$2$

c

$.$

$$What is the average PUT option payment conditional on that the PUT expires in the money?

$($

$3$

points

$)$

$($

note: this is asking for option payment NOT average stock price when option expires ITM

$)$

Q

$2$

d

$.$

$$How much should the PUT be priced at today based on Q

$2$

a and Q

$2$

c

$?$

$($

$3$

$$points

$)$

Q

$2$

e

$.$

$$Out of the price in Q

$2$

d

$,$

$$how much of that is intrinsic value and how much is time value?

$($

$3$