The following numbers were randomly generated from a standard normal distribution: -0.25 0.3 1.5 -1.2 -1.65 1.5 1). Given interest rate r = 0.01 and volatility parameter o=0.2, compute the drift parameter u of a security following a risk-neutral geometric Brownian motion. 2). Suppose security ABC follows a geometric Brownian motion with the parameters given in 1). If the initial closing price of ABC is so =s= 50, compute 6 more simulated daily closing prices for ABC. 3). If the strike price of a European call is K = 52, and the expiration of this call is at the end of 6 days, what is the payoff of the call? That is, what is the value of (S6 K)*? 4). Could you use the present value of (S6- K) * in 3) as an approximation to the cost of the call? How could you derive a 'better' cost? The following numbers were randomly generated from a standard normal distribution: -0.25 0.3 1.5 -1.2 -1.65 1.5 1). Given interest rate r = 0.01 and volatility parameter o=0.2, compute the drift parameter u of a security following a risk-neutral geometric Brownian motion. 2). Suppose security ABC follows a geometric Brownian motion with the parameters given in 1). If the initial closing price of ABC is so =s= 50, compute 6 more simulated daily closing prices for ABC. 3). If the strike price of a European call is K = 52, and the expiration of this call is at the end of 6 days, what is the payoff of the call? That is, what is the value of (S6 K)*? 4). Could you use the present value of (S6- K) * in 3) as an approximation to the cost of the call? How could you derive a 'better' cost