In a Binomial Model,if the Call Price in the Market

question 27

Multiple Choice

In a binomial model,if the call price in the market is higher than the call price given by the model,you should

• A)sell the call and sell short the stock
• B)buy the call and sell short the stock
• C)buy the stock and sell the call
• D)buy the call and buy the stock
• E)none of the above

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Definitions:

Simultaneous Game

A strategic game where all players make their decisions at the same time, often used in the context of game theory to analyze competitive situations.

Shoplifter

An individual who steals goods from a retail establishment.

Simultaneous Game

A game theory concept where players choose their strategies and make their moves at the same time, without knowledge of the others' choices.

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged; it represents a state of mutual best responses.