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A "No-Arbitrage Restriction" on Option Prices Is the Statement That

Question 3

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A "no-arbitrage restriction" on option prices is the statement that


A) Options on possibly different stocks that trade at the same price must have the same payoffs.
B) An option written on a specific stock will be perfectly correlated with the stock.
C) The price of an option is such that no strategy can be constructed using the option and the underlying that generates arbitrage profits.
D) Arbitrage trading in options is prohibited by the SEC.

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