Which of the Following Is the Lowest Possible Value of an American

question 16

Multiple Choice

Which of the following is the lowest possible value of an American call on a stock with no dividends?

• A)Max[0,S₀ - X(1 + r)^-T]
• B)S₀
• C)Max(0,S₀ - X)
• D)Max[0,S₀ (1 + r)^-T - X]
• E)none of the above

---

Definitions:

Affect

The experience of feeling or emotion, which is an essential part of the process of an individual's interaction with stimuli.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Blood Pressure

A measure of the force exerted by circulating blood on the walls of blood vessels, critical for diagnosing and monitoring cardiovascular health.

Cognitive Dissonance

A psychological phenomenon where an individual experiences discomfort from holding two or more contradictory beliefs, ideas, or values at the same time.