The Lower Bound of a Call Option

question 8

Multiple Choice

The lower bound of a call option:

• A)can be a negative value regardless of the share or exercise prices.
• B)can be a negative value but only when the exercise price exceeds the share price.
• C)can be a negative value but only when the share price exceeds the exercise price.
• D)must be greater than zero.
• E)can be equal to zero.

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Definitions:

Purchase

The act of buying goods or services.

Algebraic Expression

A mathematical phrase that can contain ordinary numbers, variables, and operators.

Verbal Phrase

A verbal phrase is a group of words expressing an action or a state of being, often used in mathematics to translate words into algebraic expressions or equations.

Divided

A mathematical operation where one quantity is evenly distributed into parts or groups.