If the Interest Rate Is Positive, Then Which of the Following

question 7

Multiple Choice

If the interest rate is positive, then which of the following statements is valid for at-the-money call and put options written on the same underlying stock for the same strike and maturity?

• A) The call is worth more than the put.
• B) The call price is equal to the put price.
• C) The call price is less than the put price.
• D) More information is needed to determine the relative values of the call and put.

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Definitions:

Self-fulfilling Prophecy

A belief or expectation that influences behavior in a way that causes the belief to become a reality.

Command and Control

A traditional management style focused on hierarchical organization, authority, and the tight control of decision-making and operations.

Act Irresponsibly

Engaging in behavior that demonstrates a lack of consideration for the consequences that may affect oneself or others.

Theory Y

A management concept that assumes employees are inherently motivated and seek responsibility, promoting a participatory management style.