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1. (I) A put option on a stock is said to be out of the money if the exercise price is less than the stock

1. (I) A put option on a stock is said to be out of the money if the exercise price is less than the stock price.

(II) The maximum loss a buyer of a stock call option can suffer is equal to the premium. (10 pts)

a. (I) is true, (II) false.

b. (I) is false, (II) true.

c. Both are true.

d. Both are false.

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