Consider the following information on wheat options on futures contract: Wheat Futures Options (prices in cents per bushel) Futures price = 605.75 Exercise price = 610 Call price = 7.50 Put price = 12.50 Risk-free rate = 3.15% Expiration = 75 days One contract = 5000 bushels e. Suppose you initially buy one put option contract on wheat futures contract with 75 days to expiration. 45 days later you observe futures price to be ,= 565. 1. Would you exercise the put option? Give reason 2. What is the payoff on your put option if you exercise the put? Discuss the payment process. 3. Assume you exercise the put option and take a position in futures contract. On the delivery day, you observe the spot price to be S =545. What is your net payoff on your investment strategy?