Which of the Following Is True for American Options

question 16

Multiple Choice

Which of the following is true for American options?

• A) Put-call parity provides an upper and a lower bound for the difference between call and put prices
• B) Put call parity provides an upper bound but no lower bound for the difference between call and put prices
• C) Put call parity provides a lower bound but no upper bound for the difference between call and put prices
• D) There are no put-call parity results

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Definitions:

Qualitative Judgment

The assessment or evaluation of something based on its qualities rather than quantitative data.

Connotative Meaning

The implied or associated emotional or cultural value attached to a word or phrase, beyond its explicit dictionary definition, affecting interpretation and response.

Denotative Meaning

The literal, dictionary definition of a word, without any emotional associations or connotations.

Ethnically Biased

Prejudice or favoritism towards or against a particular ethnicity, often resulting in unfair treatment.