Multiple Choice
Which of the following statements is true when comparing the payoffs at maturity of a long forward contract with a long position in a call option,assuming the strike price of the option is the same as the delivery price in the forward contract?
A) The maximum (i.e. ,best-case) payoff of the forward contract exceeds that of the option.
B) The minimum (i.e. ,worst-case) payoff of the forward contract exceeds that of the option.
C) The minimum payoff of the option exceeds that of the forward contract.
D) The maximum payoff of the option exceeds that of the forward contract.
Correct Answer:
Verified
Correct Answer:
Verified
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