Which one of the following is the correct expression of the lower bound of a call option price prior to option maturity?

Question

Quizplus · Accepted Answer

The lower bound of a call option price prior to option maturity is the greater of (S0 - E) or zero, as the option cannot have a negative value. This represents the intrinsic value of the option, which is the difference between the current stock price (S0) and the exercise price (E), if the current stock price is greater than the exercise price. If the current stock price is below the exercise price, the lower bound is zero. Therefore, option price cannot be lower than its intrinsic value.

Which One of the Following Is the Correct Expression of the Lower