If an Actual Put Option Premium Is Less Than What

question 160

True/False

If an actual put option premium is less than what is suggested by the put-call parity relationship, arbitrage can be conducted.

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Definitions:

Potential GDP

The maximum output an economy can produce without triggering inflation, if it fully employs all available resources, including labor and capital.

Expansionary Gap

A situation where the actual level of output in an economy exceeds its potential output, often leading to inflation.

Active Approach

An active approach in policy-making or investment strategy entails ongoing, deliberate interventions or decisions to achieve specific economic or financial goals.

Potential Output

The maximum level of real GDP that can be produced when all resources are fully employed in an economy, indicating its productive capacity.