8 marks] Static hedging with options. Consider a parametrised family of European contingent claims with the payoff X(L) at time T given by the following expression X(L)=min(2KST+KST,L) where a real number K>0 is fixed and L is an arbitrary real number such that c) Consider a complete arbitrage-free market model M=(B,S) defined on some finite state space . Show that the arbitrage price of X(L) at time t=0 is a monotone function of the variable L0 and find the limitslimlimL3K0(X(L)) limL0(X(L)) and limL00(X(L)) using the representations from part (b). d) For any L>0, examine the sign of an arbitrage price of the claim X(L) in any (not necessarily complete) arbitrage-free market model M=(B,S) defined on some finite state space . Justify your answer. 8 marks] Static hedging with options. Consider a parametrised family of European contingent claims with the payoff X(L) at time T given by the following expression X(L)=min(2KST+KST,L) where a real number K>0 is fixed and L is an arbitrary real number such that c) Consider a complete arbitrage-free market model M=(B,S) defined on some finite state space . Show that the arbitrage price of X(L) at time t=0 is a monotone function of the variable L0 and find the limitslimlimL3K0(X(L)) limL0(X(L)) and limL00(X(L)) using the representations from part (b). d) For any L>0, examine the sign of an arbitrage price of the claim X(L) in any (not necessarily complete) arbitrage-free market model M=(B,S) defined on some finite state space . Justify your