Selling a Call Option Is Generally More Valuable Than Exercising

question 32

Multiple Choice

Selling a call option is generally more valuable than exercising the option because of the option's:

• A) riskless value.
• B) intrinsic value.
• C) standard deviation.
• D) exercise price.
• E) time premium.

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Definitions:

Total Profit

The total income a business obtains after accounting for all expenses, taxes, and costs associated with its operations.

Herfindahl-Hirschman Index

A concentration measure used to calculate the level of competition within an industry by summing the squares of the market shares of all firms within the industry.

Concentration Ratio

A measure used in economics to assess the degree of market concentration, often indicating the combined market share of the top firms in an industry.

Herfindahl-Hirschman Index

A measure of market concentration to evaluate the level of competition within an industry.