Which of the Following Are NOT True

question 11

Multiple Choice

Which of the following are NOT true

• A) Risk-neutral valuation and no-arbitrage arguments give the same option prices
• B) Risk-neutral valuation involves assuming that the expected return is the risk-free rate and then discounting expected payoffs at the risk-free rate
• C) A hedge set up to value an option does not need to be changed
• D) All of the above

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Definitions:

Currency Exchange Rates

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another currency.

European Union

A political and economic union of 27 member states that are located primarily in Europe, aiming to ensure free movement of goods, capital, services, and labor.

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A currency that is used by multiple countries, facilitating easier trade and financial transactions across national borders.

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