You have really enjoyed studying FINM2002 Derivatives and will now start trading your own Derivative. You have named this the Biden Derivative and you will start selling it in the over the counter market. This derivative will pay the purchaser a guaranteed $200,000 in 11- months time as long as the spot price of iron ore is less than $90 per tonne. The current spot price of iron ore is $95.12 per tonne, the risk free rate of interest is 1.1% p.a. continuously compounded and the volatility of the iron ore price is 24% p.a. continuously compounded. Assume there are no storage costs for iron ore. a) What is the price of this derivative? (9 marks) b) What will be your profit per Biden Derivative sold if the spot price of iron ore ends up being less than $90 per tonne in 11-months time? (2 marks) c) What will be your profit per Biden Derivative sold if the spot price of iron ore ends up being more than $90 per tonne in 11-months time? (2 marks) You have really enjoyed studying FINM2002 Derivatives and will now start trading your own Derivative. You have named this the Biden Derivative and you will start selling it in the over the counter market. This derivative will pay the purchaser a guaranteed $200,000 in 11- months time as long as the spot price of iron ore is less than $90 per tonne. The current spot price of iron ore is $95.12 per tonne, the risk free rate of interest is 1.1% p.a. continuously compounded and the volatility of the iron ore price is 24% p.a. continuously compounded. Assume there are no storage costs for iron ore. a) What is the price of this derivative? (9 marks) b) What will be your profit per Biden Derivative sold if the spot price of iron ore ends up being less than $90 per tonne in 11-months time? (2 marks) c) What will be your profit per Biden Derivative sold if the spot price of iron ore ends up being more than $90 per tonne in 11-months time? (2 marks)