So for anyone who has done the mock exam I think question 9 is incorrect.

To calculate the probability of the underlying increasing they use the formula ((1+r)-d)/(u-d) this will seriously overestimate the probability of an upwards move for periods less than a year as they have used an annual interest rate and not divided that by the amount of a year until expiry.

The formula should be ((1+r)^(60/365)-d)/(u-d)

This will give an answer of $7.75. Which is not one of the 3 answers

Can anyone confirm or deny this?