The following numbers were randomly generated from a standard normal distribution: 0.5, 0.75, 1.1

i). Given interest rate r = 0.01 and volatility parameter = 0.2, compute the drift parameter of a security following a risk-neutral geometric Brownian motion.

ii). Suppose security ABC follows a geometric Brownian motion with the parameters given above. If the initial closing price of ABC is S0 = s = 10, compute 3 more simulated daily closing prices for ABC using the random numbers above.

iii)If the strike price of a European call is K = 8, and the expiration of this call is at the end of 3 days, what is the payoff of the call? That is, what is the value of (S3 K) +?