In the Binomial Model,if an Option Has No Chance of Expiring

question 37

Multiple Choice

In the binomial model,if an option has no chance of expiring out-of-the-money,the hedge ratio will be

• A)0.5
• B)infinite
• C)1
• D)0
• E)none of the above

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Definitions:

Noerr-Pennington Doctrine

a legal principle protecting the right to petition the government from liability in antitrust actions.

Clayton Act

A U.S. antitrust law, enacted in 1914, which aims to promote competition and prevent monopolies by prohibiting certain anti-competitive practices.

Foreign Sovereign Immunities Act (FSIA)

A United States law that sets the limitations as to whether a foreign sovereign nation (and its political subdivisions, agencies, and instrumentalities) can be sued in U.S. courts—judicial and legislative.

Antitrust Liability

Legal responsibility for engaging in practices that restrain trade, reduce competition, or create monopolies, violating antitrust laws.