If the Market Is in Equilibrium, Then an Option Must

question 18

True/False

If the market is in equilibrium, then an option must sell at a price that is exactly equal to the difference between the stock's current price and the option's strike price.

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Definitions:

Inductive Reasoning

A method of reasoning in which specific observations or examples are used to form general conclusions or principles.

Environmental Factors

Elements outside the organization that can impact its performance, such as economic, social, technological, and political conditions.

Sustainability

The ability to maintain or improve certain processes or states indefinitely, often in relation to environmental conservation and social responsibility.

Decision-Making

The cognitive process of selecting a course of action from among multiple alternatives, typically aiming to achieve a specific goal or outcome.