We Define the "Premium" on an Option to Be the Difference

question 4

True/False

we define the "premium" on an option to be the difference between the price at which an option sells and the exercise value (or the difference between the stock's current market price and the strike price), then we would expect the premium to increase as the stock price increases, other things held constant.

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Definitions:

Glands

Organs or tissues in the body that secrete hormones, enzymes, or other substances to fulfill specific physiological processes.

Frontonasal

Pertaining to both the forehead and nose.

Cleft Lip

A congenital deformity marked by a split or gap in the upper lip, which can occur on one or both sides and may extend up into the nose.

Maxillary Processes

Primordial structures in the embryo which contribute to the formation of the upper jaw (maxilla).