A Call Option Has a Price of $0 $0$

question 32

Multiple Choice

A call option has a price of $0.50 with exercise price of $14.00 and underlying asset price of $15.00.If the time to maturity is 60 days and the risk-free return is 7% p.a. ,what is the pricing bound error?

• A) \( 0 \)
• B) \( 0.50 \)
• C) \( 0.66 \)
• D) \( 1.16 \)

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Definitions:

Field Research

Descriptive or experimental research conducted in a natural setting outside the laboratory.

Artificial Situations

Scenarios or environments that are created or manipulated by researchers to study behavior in a controlled setting.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Variability

The extent to which data points in a set differ from each other and from the average of the set, indicating the spread or dispersion.