The lower bound on a call's value is the:

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Quizplus · Accepted Answer

The lower bound on a call's value is the difference between the stock price and the exercise price, or zero, whichever is greater. This is because the value of a call option can never be negative, so the minimum value it can have is zero (if the stock price is lower than the exercise price). If the stock price is higher than the exercise price, then the call option has some intrinsic value equal to the difference between the two prices. Therefore, the lowest possible value for a call option is the higher of these two values (i.e. the stock price minus the exercise price, or zero).

The Lower Bound on a Call's Value Is The