A Stock Has Both a Call and a Put Option

question 8

Multiple Choice

A stock has both a call and a put option outstanding. The exercise price was set equal to the stock price. If the option were to expire now what would be the minimum value of the call and the put respectively?

• A) (S_T - E); ³ 0.
• B) 0; (S_T - E).
• C) <0; >0.
• D) 0; 0.
• E) (E - S_T); (S_T - E).

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Definitions:

Millions

A numerical count or quantity equivalent to one thousand thousands or 10^6.

Standard Deviation

A measure of the dispersion or variability of a set of numbers, indicating how spread out the numbers are from their average value.

Units

Basic quantities used to specify measurements in various dimensions, such as length, mass, or time.

Standard Deviations

A metric that calculates the extent of spread or variability of data points from the average value.