which one is true? for any type of option strategy, the payoffs will never be negative for any type of option strategy, the profit will never be negative. There is no option strategy that guarantees positive profit There is no option strategy that guarantees positive payoff None above
which one is true? for any type of option strategy, the payoffs will never be negative for any type of option strategy, the profit will never be negative. There is no option strategy that guarantees positive profit There is no option strategy that guarantees positive payoff None above
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
which one is true?
for any type of option strategy, the payoffs will never be negative
for any type of option strategy, the profit will never be negative.
There is no option strategy that guarantees positive profit
There is no option strategy that guarantees positive payoff
None above
Expert Solution
Step 1
Option C is true.
Justification:
There is no market instrument in presence that is guaranteed to provide a profit. On the grounds that guarantee exists just as long as there is a guarantee of gratifying a obligation. However in Option A (for any type of option strategy, the payoffs will never be negative), a payoff of an option can never be negative but it can be positive at times where the actual payoff relies on the underlying asset’s price.
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