For a given call option price, which of the following statements is correct?
A. The closer the strike price is to the current price of the underlying asset, the larger is the time value of the option.
B. As the strike price approaches the price of the underlying asset, the intrinsic value of the option increases and the time value of the option decreases.
C. The closer the strike price is to the current price of the underlying asset, the smaller the time value of the option.
D. As the strike price approaches the price of the underlying asset, the time value of the option approaches zero.
Answer: A
You might also like to view...
If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency,
A) more hot dogs should be produced. B) fewer hot dogs should be produced. C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. D) production should be halted. E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.
A black market is a market in which
A. goods are sold at outlet prices. B. sales take place exclusively at outlet prices. C. sales taxes are effectively doubled. D. goods are traded at prices above their legal maximum prices.
A company can hire non-union workers, but a condition of their employment is that they must join the union within their first 90 days on the job. This is an example of a
A. closed-shop. B. union shop. C. voluntary craft union. D. right-to-work law.
Cross elasticity of demand compares the change in the
a. price of one good that is generated by a change in the price of another good b. quantity demanded of one good that is generated by a change in the price of another good c. price of one good that is generated by a change in quantity demanded of another good d. quantity demanded of one good that is generated by a change in the supply of another good e. quantity demanded of one good that is generated by a change in quantity demanded of another good