Relative to the Underlying Stock, a Call Option Always Has

question 74

Multiple Choice

Relative to the underlying stock, a call option always has:

• A) A higher beta and a higher standard deviation of return
• B) A lower beta and a higher standard deviation of return
• C) A higher beta and a lower standard deviation of return
• D) A lower beta and a lower standard deviation of return

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Definitions:

Utility Function

A mathematical representation of a consumer's preference ranking over a set of goods or services, indicating satisfaction levels.

Units Of X

A generic term for measuring quantities of a variable or unspecified item, labeled as 'X'.

Exchanges Of X For Y

Transactions or trades where one good, service, or asset (X) is traded for another (Y).

Utility Function

An economic term describing how consumers rank different bundles of goods or levels of happiness.