The Value of an Option to Purchase a Stock Index

question 29

True/False

The value of an option to purchase a stock index futures contract depends on the outlook of the futures contract.

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Definitions:

Abhijit Banerjee

An economist known for his research in the field of development economics, particularly for his work on poverty alleviation and for being a recipient of the Nobel Prize in Economics.

Consumption Decisions

Choices made by individuals, firms, or governments regarding which goods or services to allocate their limited resources toward.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors. This concept is one of the fundamental principles of economics that helps explain the gains from trade.

Absolute Advantage

The capacity for a person, business, or nation to create a product or offer a service with a per-unit expense that's beneath the cost any other party can achieve for that same product or service.