Consider Two Six-Month American Puts at Strikes 90 and 100

question 17

Multiple Choice

Consider two six-month American puts at strikes 90 and 100. The risk free rate is 2%. The difference between the two put prices at any time before maturity will always be

• A) Less than $10.
• B) Equal to $10.
• C) Greater than $10.
• D) One cannot be sure of which of the preceding three choices is valid and more information may be required.

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Definitions:

Labor Resources

Human workforce available for the production of goods and services.

Short Run

A time period in which at least one factor of production is fixed, limiting the ability of a business to adjust fully to market changes.

Skilled Labor

Workers who possess specialized skills, training, and education that are required to perform complex tasks.

Unskilled Labor

Refers to workers who lack specialized training or qualifications, often performing manual or routine tasks.