Which of the Following Is Correct

question 52

Multiple Choice

Which of the following is correct ?

• A) Risk neutral refers to the state of ignoring the risk involved in determining expected rates of return.
• B) Risk neutral pricing uses the cost of capital to discount the future cash flows of the option.
• C) Risk-neutral pricing ignores the probability of state in pricing the option.
• D) b and c

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Definitions:

Pleasure

A feeling of happiness, enjoyment, or satisfaction derived from an experience that is pleasing to the senses or mind.

Oedipus Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.

Phallic Stage

Freudian concept indicating the third stage of child psychosexual development, where the libido (sexual energy) focuses on genital organs.

Freud

Sigmund Freud, originating from Austria and a neurologist by profession, introduced the concept of psychoanalysis, which involves treating mental health issues via dialogue with a psychoanalyst.