Which of the Following Statements Is Correct About Cash-Or-Nothing Options

question 18

Multiple Choice

Which of the following statements is correct about cash-or-nothing options

• A)they are subject to no credit risk
• B)they must be priced by the binomial model
• C)they have lower upside gains and lower downside losses than ordinary options
• D)they are equivalent to short positions in asset-or-nothing options
• E)none of the above

---

Definitions:

Seventeenth Century

The period from 1601 to 1700 in the Gregorian calendar, marked by significant developments in sciences, arts, and the globalization of trade.

Puritans

A group of English Protestants in the 16th and 17th centuries who sought to purify the Church of England from its Catholic practices, emphasizing strict religious discipline.

Quakers

A religious group officially known as the Religious Society of Friends, known for their commitment to pacifism, simple living, and equality.

Massachusetts

Massachusetts is a state in the northeastern United States, known for its significant historical events, educational institutions, and being a leader in healthcare, technology, and innovation.