Explanation
To solve this question, we need to revisit how delta is calculated in a single step binomial model:
Consider a portfolio with just two positions: 1 Long Call option, and Short Stock. We do not know what (Delta) is.
Now if the current price of the stock is P, which can take the value P2 (higher value) and P1 (lower value) in the future at time T, then needs to be such that the value of the portfolio is equal in both the cases. If the price goes up, the value of the option will be $1 (given) and the value of the short stock will be - P2. If the price goes down, the value of the option will be $0, and the value of the stock will be - P1.
Therefore, $1 - P2 = $0 - P1.
Solving for , we get = $1 /(P2 - P1) = $1 / ($102-$98) = 1/4.

Explanation
A swaption is an option to enter into a fixed for floating interest rate swap at a point in the future, with the fixed rate decided upfront. These options can be European, Bermudan or American, in terms of what dates the option can be exercised. A receiver option on a swap is an option that gives the buyer the right to enter into a swap and receive the fixed rate and pay the variable rate. In the case of a payer option, the buyer pays the fixed rate and receives the variable rate. One way to remember this is that receiving and paying are terms used with reference to the fixed rates.

Explanation
The efficient markets hypothesis states that all known information is captured in the prices of a security. It does not explain the shape of the yield curve.
The expectations hypothesis, the LPT and the market segmentation theory are all attempts to explain the shape of the term structure of interest rates.
Therefore Choice 'c' is the correct answer as it does not explain the shape of the yield curve.

Explanation
The equivalent continuously compounded rate in this case can be calculated as ln(1+5.2%) = 5.07%. The other answers are incorrect.
Refer to the tutorial on interest rates for more details on how continuously compounded rates work.

Explanation
An increase in volatility increases the value of the option, and so do increases in the price of the underlying and the risk free rate. However, since a European option can only be exercised at expiry, an increase in the time to expiry may not necessarily increase the value of the option as it may increase the uncertainty around a more certain payout.
Consider the extreme case of a deep in the money European call option that has 1 day left to expiry, and a payout is certain. Now imagine the time to expiry is increased by say, 6 months. Now the payout is no longer certain as no one knows what the value of the underlying will end up at after 6 months. In such a case, the value of the option would decline. But this applies only to a European option. An American option, which can be exercised any time, will not be affected by this reasoning.