The Lower Bound of a Put Option Premium Is the Greater

question 41

True/False

The lower bound of a put option premium is the greater of zero and the difference between the exercise price and the spot rate; the upper bound of a currency put option is the exercise price.

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Definitions:

Sandstone Lens

A body of sandstone that is thicker in the middle and tapers towards the edges, often sandwiched between other rock layers.

Petroleum

A general term for naturally occurring hydrocarbons, whether liquid, gaseous, or solid.

Thick Shale

Refers to a substantial accumulation of shale rock, which is a fine-grained sedimentary rock formed from clay and silt.

Limestone

A sedimentary rock mainly composed of calcium carbonate, formed either by direct precipitation from marine water or through the accumulation of shell, coral, and algal debris.