Calculate the Price of a Two-Month European Call Option Given

question 34

Multiple Choice

Calculate the price of a two-month European call option given the following information: the exercise price is $19,the current share price is $20 and the risk-free interest rate is 15% p.a.Furthermore,the share price may go up by 15 per cent or down by 15 per cent at the end of each month.Assume a risk-neutral world and time periods of one month each.

• A)$2.40
• B)$1.79
• C)$2.43
• D)$1.82

---

Definitions:

Psychological Disorders

Mental disorders characterized by patterns of thought, feeling, or behavior that are significantly distressing, disruptive, or harmful to oneself or to others.

B. F. Skinner

An influential American psychologist known for his work in behaviorism, specifically the development of the theory of operant conditioning.

Wilhelm Wundt

Often considered the father of modern psychology, he established the first psychology laboratory at the University of Leipzig, marking the separation of psychology from philosophy.

Control Behaviour

Refers to the management or regulation of one's actions or reactions in various situations.