Exercises
1. Write a Python program to price a call option.
2. Explain the empty shell method that is used while writing a complex Python program.
3. Explain the logic behind the so-called comment-all-out method when writing a complex Python program.
4. Explain the usage of a return value when we debug a program.
5. When we write the CND, we could define a1, a2, a3, a4, and a5 separately. What are the differences between the following two approaches?
Current approach:
(a1,a2,a3,a4,a5)=(0.31938153,-0.356563782,1.781477937,-1.821255978,1.330274429)
An alternative approach:
a1=0.31938153 a2=-0.356563782 a3=1.781477937 a4=-1.821255978 a5=1.330274429
6. What are the definitions of effective annual rate, effect semi-annual rate, and risk-free rate for the call option model? Assuming that the current annual risk-free rate is 5 percent, compounded semi-annually, which value should we use as our input value for the Black-Scholes call option model?
7. What is the call premium when the stock is traded at...
