Please show the full answer. 1. Maybe Need to apply the Taylor approximate. 2.How the following function (the second line of picture) be approximated by1/T(F/K-1)^2. 3. Especially the integral part please be written in detailed.

Show that the following function 2TT [ can be approximated by 1F012 TKO where T > 0 is time, 1!\" > 0 is a net interest rate, K0 and K are strike prices, and F0 is a futures price. put K and callK are put resp. call options with strike price K that expire time T in the future. Use the following information: (1) The putcall parity is given by: putK : callK + egTTK SO. (2) The future price F0 of the underlying and its current price are related as: F0 I QTT ' So. (3) K0 z F0. Hint: this assumption allows the application of a Taylor approximation (see the latest Handout on Blackboard, Section 13.6)