Which of the Following Is True Regarding Option Pricing

question 72

Multiple Choice

Which of the following is true regarding option pricing?

• A) The longer the maturity of the option, the higher the premium
• B) The more volatile the underlying stock, the lower the premium
• C) Option prices are less volatile than equity prices
• D) European options are more valuable than American options

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Definitions:

Clutch Size

The total number of eggs laid or young born by a female bird, reptile, or similar animal at one time.

Extinction

The end of an organism or of a group of organisms, usually a species.

Migration Routes

The paths or directions taken by animals or people as they move from one location to another, often seasonally or cyclically.

Evolutionary Potential

The capacity of a species or a population to adapt and evolve over time in response to environmental changes, genetic variability, and selection pressures.