Pricing Options in the Risk-Neutral World Implies That

question 12

Multiple Choice

Pricing options in the risk-neutral world implies that

• A)Trading of options is without risk.
• B)All assets are risk-free in this world.
• C)All assets earn the risk-free rate of return.
• D)All investors are risk-neutral.

---

Definitions:

Intersex

A term describing individuals born with biological sex characteristics (such as chromosomes, genitalia, and hormone levels) that do not fit typical definitions for male or female categories.

Sex Assignment Surgery

Medical procedures conducted to physically alter a person’s birth gender to reflect their gender identity or correct intersex conditions.

Cultural Assumptions

Beliefs or ideas that are considered to be true within a specific culture without being questioned.