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:

Groupthink

A psychological phenomenon in highly cohesive groups, where the desire for harmony and conformity results in irrational or dysfunctional decision-making outcomes.

Introducing New Topics

The act of bringing new subjects or areas of discussion into a conversation or debate.

Concurrence

Agreement in opinion or outcome among individuals or groups.

Groupthink

is a psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.