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:

False Positive

The result of a laboratory test that reports something as true when in fact it is not true. This can occur for pregnancy tests, when a woman might not be pregnant even though the test says she is, or during pregnancy, when a problem is reported that actually does not exist.

Laboratory Test

An examination of materials, organisms, or physical reactions conducted under controlled conditions to gather data or insights.

Prenatal Development

The process of growth and development within the womb, from conception to birth.

Order

The arrangement or disposition of people or things in relation to one another according to a particular sequence, pattern, or method.