Which One of the Following Is the Upper Price Bound

question 25

Multiple Choice

Which one of the following is the upper price bound for the intrinsic value of a European call option on a stock?

• A) $0
• B) strike price
• C) stock price
• D) Max (S - K, 0)
• E) Max (K - S, 0)

---

Definitions:

Governmental Authority

Denotes the legal and formal right of a government to enact laws, enforce rules, and regulate behaviors within its jurisdiction.

Traditional Authority

refers to a form of leadership in which the power of rulers is rooted in customs, traditions, and societal norms, often passed down through generations within families or clans.

Bureaucracy

An organizational structure characterized by standardized procedure, hierarchy of authority, and a clear division of labor, often within governmental agencies.

Capitalism

A financial system in which commerce, business, and resources are primarily or wholly owned and managed by private individuals for monetary gain.