Statements regarding an option prior to expiration

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Reference no: EM131939952

1. Which of the following statements regarding an option prior to expiration is CORRECT? The minimum value of:

A. a European put is more than the minimum value of an American put.

B. an American call is equal to the minimum value of a European call.

C. a European put is equal to the minimum value of an American put.

D. an American call is more than the minimum value of a European call.

2. Consider a European put option expiring in 90 days on a non-dividend-paying stock trading at 82 when the risk-free rate is 4%. The lower bound for this European put option with an exercise price of 85 is:

A. $0.

B. $2.39.

C. $2.18.

D. $2.11.

Reference no: EM131939952

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