Question: Using the Merton jump formula, generate an implied volatility plot for K = 50, 55, . . . 150. a. How is the implied volatility

Using the Merton jump formula, generate an implied volatility plot for K =
50, 55, . . . 150.
a. How is the implied volatility plot affected by changing αJ to−0.40 or−0.10?
b. How is the implied volatility plot affected by changing λ to 0.01 or 0.05?
c. How is the implied volatility plot affected by changing σJ to 0.10 or 0.50?

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