Assuming No Rebates Upon Knock-Out,a Down-And-Out Call Option Is Worth

question 18

Multiple Choice

Assuming no rebates upon knock-out,a down-and-out call option is worth less than a vanilla call

• A)When the knock-out barrier lies above the current stock price.
• B)When the knock-out barrier lies below the current stock price.
• C)When the knock-out barrier is far from the strike price.
• D)Always.

---

Definitions:

Enforcement

The act of compelling compliance with laws, regulations, or standards.

Speedier Method

A more efficient and rapid process or technique to achieve a certain objective or outcome.

Confidentiality

The requirement to keep certain information secret or private, often seen in professional or contractual relationships.

Less Costly

Referring to an option or solution that is cheaper or requires less financial expenditure compared to others.