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c. Explain and show a diagram of the straddle option strategy. Discuss its payoffs. [15 marks] d. Define the initial and maintenance margin, and explain

c. Explain and show a diagram of the straddle option strategy. Discuss its payoffs. [15 marks] d. Define the initial and maintenance margin, and explain their relationship. [5 marks] e. The current value of a stock index is 220, and its dividend yield is 2.4% per annum. The risk-free interest rate is 6% per annum, with continuous compounding. Calculate the three-month futures price. [5 marks]

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