A Basic Solution and a Basic Feasible Solution

question 19

Multiple Choice

A basic solution and a basic feasible solution

• A)are the same thing.
• B)differ in the number of variables allowed to be zero.
• C)describe interior points and exterior points,respectively.
• D)differ in their inclusion of nonnegativity restrictions.

---

Definitions:

Risk-Free Interest Rate

The hypothetical yield from an investment assumed to be free of any financial risk, often reflected through government bond yields.

Time To Expiration

The remaining period until the expiration date of a financial instrument, typically an option or futures contract.

Option's Intrinsic Value

The difference between the current price of the underlying asset and the strike price of an option, assuming the option is in-the-money.

Strike Value

The predetermined price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.