The Time Value Is Asymmetric in Value as You Move

question 12

True/False

The time value is asymmetric in value as you move away from the strike price (i.e., the time value at two cents above the strike price is not necessarily the same as the time value two cents below the strike price).

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Definitions:

Marginal Benefit

The boost in value or pleasure gained from the consumption of one more unit of a good or service.

Supply and Demand

Fundamental economic principles that describe how prices are determined in a market based on the quantity of a good or service available and desired.

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of pollution, often tradeable in a market to encourage reduction of pollution in cost-effective ways.