Explain briefly the difference between a European call option and a down-and-out call option. Why would an investor choose to buy the latter option rather than just the standard call option?
There are FOUR questions in this assessment. Attempt ALL of them.
- Please note that this is NOT a group exercise. You are not allowed to discuss
the questions with others, so the answers to questions must be worked out
and written up individually. You may receive reduced or no marks if there are
strongsimilaritiesbetweentheworkhandedinbytwoormorepeople. - Note that your answer files, consisting of ONE Word document (or handwritten answers) and ONE Excel file showing all the calculations, are to be
submitted electronically via the “E-submissions” link on the module’s Canvas
sitebythedeadline.
Duration: 24 hours
