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Suppose that you buy a weather call option with a strike price= 200 based on HDD because you are concerned about unexpectedly cool weather in

Suppose that you buy a weather call option with a strike price= 200 based on HDD because you are concerned about unexpectedly cool weather in summer. The payment rate on the option contract is $1,000 and the payment cap is $200,000.

A.) If the cumulative HDD = 320, what is your payoff?

B.) If the cumulative HDD= 450, what is your payoff?

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