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Which of the Following Statements Is Correct About Cash-Or-Nothing Options

Question 18

Multiple Choice

Which of the following statements is correct about cash-or-nothing options


A) they are subject to no credit risk
B) they must be priced by the binomial model
C) they have lower upside gains and lower downside losses than ordinary options
D) they are equivalent to short positions in asset-or-nothing options
E) none of the above

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