​A Call Option Premium Has a Lower Bound That Is

question 12

Multiple Choice

​A call option premium has a lower bound that is equal to the greater of zero and the difference between the underlying ____ prices. The upper bound of a call option premium is the ____ price.

• A) ​spot and exercise; exercise
• B) ​spot and exercise; spot
• C) ​exercise and spot; exercise
• D) ​exercise and spot; spot

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Definitions:

Fixed Amount

A specific, unchanging quantity of money, goods, or services.

Strategic Planning

The process by which an organization defines its strategy, or direction, and makes decisions on allocating its resources to pursue this strategy.

Tactical Planning

Short-term, detailed planning that supports strategic decisions, focusing on current operations and immediate actions.