Because of Arbitrage, the Price of an Option

question 78

Multiple Choice

Because of arbitrage, the price of an option

• A)exceeds its intrinsic value
• B)is less than its intrinsic value
• C)cannot be less than its intrinsic value
• D)cannot be greater than its intrinsic value

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Definitions:

Direct Approach

A straightforward method of communication where intentions or demands are stated clearly and without evasion.

Analytical Approach

A method of problem-solving or analysis that involves breaking a topic into parts to gain a deeper understanding.

Indirect Approach

A communication strategy where the main message is presented subtly, often wrapped in supportive arguments or context.

Locating Data

The process of finding specific information or datasets from within a larger database or collection of resources.