Which of the Following Is NOT a Factor in Determining

question 73

Multiple Choice

Which of the following is NOT a factor in determining the premium price of a currency option?

• A) the present spot rate
• B) the time to maturity
• C) the standard deviation of the daily spot price movement
• D) All of the above are factors in determining the premium price.

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Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profitability of a business beyond basic financial gains.

Monopolistically Competitive

Pertaining to a market scenario characterized by many sellers offering differentiated products or services, creating a competitive atmosphere.

Marginal Cost

The growth in overall expenses resulting from the manufacture of an extra unit of a product or service.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the average cost per unit of output.