For a nondividend-paying stock, you are given: (i) The current stock price is 40. (ii) At the end of one month the stock price will be either 42 or 38. Assume that the continuously compounded risk-free interest rate is 0.08. (a) Calculate the current price of a 1-month 39-strike European call. (b) Identify an arbitrage strategy if the market price of the option is $1.5.

In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society? a. two oil companies own adjacent oil fields over a common pool of oil, and each company decides whether to drill one well or two wells.b. two airlines dominate air travel between city a and city b, and each airline decides whether to charge a "high" airfare or a "low" airfare on flights between those two cities.c. two superpowers decide whether to build new weapons or to disarm.d. in all of the above cases, the cooperative outcome of the game is good for the two players and bad for society