The lower bound of a call option:
A) can be a negative value regardless of the stock or exercise prices.
B) can be a negative value but only when the exercise price exceeds the stock price.
C) can be a negative value but only when the stock price exceeds the exercise price.
D) must be greater than zero.
E) can be equal to zero.

Question

Quizplus · Accepted Answer

The lower bound of a call option is the maximum of zero or the difference between the stock price and the exercise price, so it can be zero but not negative.

The Lower Bound of a Call Option