3. At the close of the trading day you sell an atthemoney 11month European put on a nondividend paying stock trading at $313.5] with an implied volatility of 45% when the continuouslycompounded rate of interest is T%;'year. This is the only pcsition in your account. 1if'our riskmanagement department tells you that the 99% coverage prioe range is 3:35.12} and the 99% volatility coverage range is :l:2%. {aj Use your ElackScholes option pricer to calculate {and ll in the table below} your protf loss if you buy back your short option as a function the changes in stock price and volatility indicated (i.e. premium cost of option with different stock price and volatility}. Volatility Stock Price 29.1] 313.5 32.1] 33.5 35.1] 36.5 38.1] 39.5 41.1] 42.5 {b} If the risk appetite of the the rm that guarantees the performance of your trades is that no account should lose money for 99% of movements of the primary risk dimensions {stock price and volatility in this case). referring to the table above how much cash would you need to have in your account to put this position on? [c] Using the values in the table and the centered nitedifference formula discussed in lecture, calculate the delta of your position if the volatility suddenly decreased to 35% with all other variables remaining the same