If the Price of an Underlying Asset Has a Standard

question 29

Multiple Choice

If the price of an underlying asset has a standard deviation of zero:

• A) options for this asset would likely not exist.
• B) option for this asset would be highly valued.
• C) the intrinsic value of options for this asset would equal the asset's price.
• D) options for this asset would have a time value of the option equal to the price of the asset.

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Definitions:

Resource Prices

The cost of inputs used in the production of goods and services, such as labor, raw materials, and capital.

Market System

An economic system relying on market forces to allocate resources and to determine and regulate prices for goods and services.

What Will Be Produced

A fundamental economic question that addresses the kinds of goods and services to be made available in an economy, determined by factors such as resources, technology, and consumer preferences.

Consumer Sovereignty

The idea that what consumers want influences the goods and services produced in an economy.