Consider Two Six-Month European Calls at Strikes 90 and 100 $C ( 90 ) - C ( 100 )$

question 10

Multiple Choice

Consider two six-month European calls at strikes 90 and 100.The risk free rate is 2%.Which of the following alternatives best describes the condition that must be met by the difference in prices $C ( 90 ) - C ( 100 )$ ?

• A)It must be strictly less than $10.
• B)It must be less than or equal to $10.
• C)It must be strictly greater than $10.
• D)There is insufficient information to answer this question.

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Growth Rate

Growth rate measures the increase in value of a particular variable, such as the economy, a business, or an investment, within a specific time frame.

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Pertaining to or occurring every year.

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The gross domestic product divided by the population, measuring the average economic output per person and often used as an indicator of living standards.

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