Other Things Equal, After an Option Is Created, Its

question 1

Multiple Choice

Other things equal, after an option is created, its:

• A) time value approaches zero as time passes.
• B) time value increases into its expiration date.
• C) value moves inversely with the volatility of the underlying stock.
• D) value will be zero whenever it is out of the money.

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Definitions:

Deadlines

Specific times or dates by which tasks must be completed or submissions must be made.

Behavioral Economics

A branch of economics that uses social and psychological factors in understanding decision making. It is particularly concerned with the limits of rationality in those decisions.

Sociology

The study of social behavior, society, patterns of social relationships, social interaction, and culture.

Psychology

the scientific study of the human mind and its functions, especially those affecting behavior in a given context.