As an Option Nears Its Expiration Date, the Size of the Premium

question 85

Multiple Choice

As an option nears its expiration date, the size of the premium approaches

• A)zero.
• B)infinity.
• C)its intrinsic value.
• D)an amount which varies, depending on prevailing market interest rates on the expiration date.

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Definitions:

Population Standard Deviation

A measure of the dispersion of a set of data from its mean, calculated for the entire population.

Confidence Interval

A set of numerical outcomes, sourced from gathering samples, anticipated to hold the measure of a not yet known population parameter.

Population Total

The sum total of all observations or values in the entire population being studied.

Prediction Interval

An estimate of an interval in which future observations will fall, with a certain probability, given what has already been observed.