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Stock a Has a Volatile Price History, and Stock B

question 66

Multiple Choice

Stock A has a volatile price history, and Stock B has a stable price history. Stock A and Stock B are both trading at $25 per share. Which of the following 1-month options should sell for the highest price?


Definitions:

Unrealized Holding

A profit or loss that arises from the change in value of an investment that has not yet been sold or realized.

Trading Securities

Financial instruments such as stocks and bonds that are bought and sold for the purpose of generating profits on short-term fluctuations in their prices.

Held-to-Maturity Securities

Held-to-maturity securities are debt securities that an investor intends and is able to hold until their maturity date, recorded at amortized cost.

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