A "No-Arbitrage Restriction" on Option Prices Is the Statement That

question 15

Multiple Choice

A "no-arbitrage restriction" on option prices is the statement that

• A)Options on possibly different stocks that trade at the same price must have the same payoffs.
• B)An option written on a specific stock will be perfectly correlated with the stock.
• C)The price of an option is such that no strategy can be constructed using the option and the underlying that generates arbitrage profits.
• D)Arbitrage trading in options is prohibited by the SEC.

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Laval

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