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Because of Arbitrage, an Option Should Not Sell for Less

question 23

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Because of arbitrage, an option should not sell for less than its intrinsic value.


Definitions:

Unloading Rates

The speed at which goods are removed from a container, ship, or other transport vehicle.

Cumulative Probability

represents the likelihood of a random variable falling within a specified range, calculated as the sum of probabilities up to a certain point.

Monte Carlo Method

A simulation technique that uses random elements when chance exists in their behaviour.

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