- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 8. Pricing and Valuation of Options
- Subject 2. Arbitrage and Replication
CFA Practice Question
Due to their asymmetric payoff profile, options are characterized by no-arbitrage price bounds. The lower bound is a function of the present value of the exercise price and the underlying price, while the upper bound is the ______ for a call and the ______ for a put. A. underlying price, exercise price
B. exercise price, underlying price
C. exercise price, option price
Correct Answer: A
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