B. Anticipating most Australians will be obliged to stay at home this summer rather than go away for summer holidays, and that it will be a hot summer, a local electricity dealer in a holiday town bought call options on the cumulative CDD for historically the hottest 10 days in December with a strike of 350, and the payment is $3000 per degree day. (Hint: CDD are calculated in degrees Fahrenheit.) The temperatures forecasted for the 10 hottest days in December (in degrees Celsius) are as below: Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 39.7 38.6 42.1 40.2 42.3 39.8 41.5 40.0 39.7 41.8 What is the payoff for the electricity dealer? You also believe that most will be staying at home over this summer, do you think the call prices would likely to (i) fall, (ii) increase, or (iii) stay the same, and why? (6 marks) B. Anticipating most Australians will be obliged to stay at home this summer rather than go away for summer holidays, and that it will be a hot summer, a local electricity dealer in a holiday town bought call options on the cumulative CDD for historically the hottest 10 days in December with a strike of 350, and the payment is $3000 per degree day. (Hint: CDD are calculated in degrees Fahrenheit.) The temperatures forecasted for the 10 hottest days in December (in degrees Celsius) are as below: Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 39.7 38.6 42.1 40.2 42.3 39.8 41.5 40.0 39.7 41.8 What is the payoff for the electricity dealer? You also believe that most will be staying at home over this summer, do you think the call prices would likely to (i) fall, (ii) increase, or (iii) stay the same, and why? (6 marks)