The Value of an Option Is Equal to The

question 244

Multiple Choice

The value of an option is equal to the:

• A) Intrinsic value minus the time premium.
• B) Time premium plus the intrinsic value.
• C) Implied standard deviation plus the intrinsic value.
• D) Summation of the intrinsic value, the time premium and the implied standard deviation.
• E) Summation of delta, theta, vega, and rho.

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Definitions:

Fireworks

Explosive devices used primarily for entertainment purposes, emitting light, noise, smoke, and various colors when ignited.

Guaranteed Insurability

An insurance policy feature that allows the policyholder to buy additional coverage without proof of insurability at designated times.

Life Insurance

A contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured.

Insured

A person, company, or entity covered under an insurance policy to receive compensation for a specified loss or damage.