You Know That a Call Will Finish in the Money

question 11

Multiple Choice

You know that a call will finish in the money. Based on that single piece of information, you also know which one of the following?

• A)The stock price will equal the strike price at expiration.
• B)The risk-free rate is zero.
• C)A put on the same underlying asset with the same strike and expiration will finish out of the money.
• D)The strike price will exceed the stock price at expiration.
• E)The price of the call is equal to the price of the put.

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Definitions:

Natural Monopolies

A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than what would be possible if there were multiple firms operating in the market, usually due to high fixed costs or unique resource requirements.

Occupational Safety

The discipline focused on protecting the safety, health, and welfare of people engaged in work or employment.

Social Regulation

Rules designed to protect the public interest by controlling how businesses operate, focusing on issues like health, safety, and the environment.

Industrial Regulation

Government policies and rules that oversee the operations, standards, and competitive practices of businesses within specific industries.