Consider a European call with strike price of Rs.50 on a stock priced at Rs.60. The stock can go up by 15% or down by 18% in each of the two binomial periods. The risk-free rate is 10%. Determine the price of the option today. Show the hedge ratio at each of the nodes.

The future price of a commodity is Rs.120. A 9-month American call option is available on this commodity with the strike price Rs. 123. The volatility is 30% and risk-free interest rate is 5% with continuous compounding. Using 3-step binomial tree, determine the price of the call option. (Hint: a=1 for future option)

Suppose the current INR/USD exchange rate is 79 rupee per dollar. The six-month forward exchange rate is 78 INR. The six-month INR interest rate is 5% per annum continuously compounded. Estimate the six-month USD interest rate.

On a particular day, the July NIFTY Index futures was priced at 12322. The current value of the index was 12199. The contract expires 73 days later. suppose the risk-free rate is 6% and the dividend yield is 2.75%. Is the futures overpriced or underpriced? Based upon the results, devise a suitable arbitrage opportunity.

all of these are differnet questions.