Which of the Following Is NOT True

question 12

Multiple Choice

Which of the following is NOT true?

• A) An American put option is always worth less than the present value of the strike price
• B) A European put option is always worth less than the present value of the strike price
• C) A European call option is always worth less than the stock price
• D) An American call option is always worth less than the stock price

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Definitions:

Initial Endowment

The original allocation of resources, such as wealth or goods, that an individual or entity starts with.

Numeraire

A standard unit of measurement in economics used to express prices or monetary values, making it easier to compare different goods or services.

Pareto Optimal Allocations

Situations where no reallocation can make someone better off without making someone else worse off in an economy.

Edgeworth Box

A diagram used in microeconomics to show the distribution of resources or the outcome of trade between two parties.