Which of the Following Inequalities Correctly States the Relationship Between

question 50

Multiple Choice

Which of the following inequalities correctly states the relationship between the difference in the prices of two European calls that differ only by exercise price

• A)(X_2? - X₁)(1 + r)^-T ≥ C_e(S₀,T,X₁)- C_e(S₀,T,X₂)
• B)(X_2? - X₁)≥ C_e(S₀,T,X₂)- C_e(S₀,T,X₁)
• C)(X₂ - X₁)(1 + r)^-T ≥ C_e(S₀,T,X₁)+ C_e(S₀,T,X₂)
• D)(X_2? - X₁)≥ C_e(S₀,T,X₁)- C_e(S₀,T,X₂)
• E)none of the above

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