A Put Option Is Said to Be in the Money

question 73

Multiple Choice

A put option is said to be in the money if

• A)it is written on a Treasury bill or other money-market asset.
• B)it has increased in price since it was first written.
• C)the price of the underlying asset is currently less than the strike price.
• D)the price of the underlying asset is currently less than the strike price plus the option premium.

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Definitions:

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, which enhances efficiency in international trade.

Production Possibilities

A curve or frontier representing the maximum combination of goods and services that can be produced efficiently with available resources and technology.

Specialize

To focus on a particular area of expertise or production, often to increase efficiency or performance in that area.

Comparative Advantage

The principle that holds a party can produce some goods at a lower relative cost than another, promoting beneficial trade.