a. Using the following information, calculate the price of a 12-month short call option using a two-step binomial tree procedure. So = 15, K = 16, r = 5% (annual), o = 30% (annual). You are given the following equations: a-d p= (1) a = erst (2) U = e oAt (3) d = = = = (4) u-d f = [pfu + (1 - p)fale-rat (5) (60 marks) b. Explain the impact of option volatility on option pricing. (40 marks)