Which of These Values Are the Combinations of a Value

question 8

Multiple Choice

Which of these values are the combinations of a value and the probability of its occurrence?

• A) probable values
• B) common values
• C) present values
• D) expected values
• E) risk-adjusted values

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Definitions:

Strike Price

The agreed-upon rate at which the possessor of an option may acquire (if it's a call option) or dispose of (if it's a put option) the underlying financial instrument or commodity.

Option

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at a specified price within a specified time.

American Call Option

A financial agreement granting the purchaser the option, yet not the compulsion, to purchase a stock, bond, commodity, or any asset at a predetermined price within a defined time frame.