The Lower Bound of a Call Option

question 90

Multiple Choice

The lower bound of a call option:

• A) can be a negative value regardless of the stock or exercise prices.
• B) can be a negative value but only when the exercise price exceeds the stock price.
• C) can be a negative value but only when the stock price exceeds the exercise price.
• D) must be greater than zero.
• E) can be equal to zero.

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Definitions:

AC Leakage Test

An AC Leakage Test measures the amount of alternating current (AC) leaking through the insulation of an electrical device to ensure safety and functionality.

DMM

An acronym for Digital Multimeter, a tool used to measure electrical properties such as voltage, current, and resistance.

Reverse Polarity

A condition where electrical connections are made with reverse orientation, leading to potential damage or malfunction in electronic equipment.