Which of the Following Is True of an Option

question 5

Multiple Choice

Which of the following is true of an option?

• A)It is based on market volatility and thus assures a high profit to risk preferring individuals.
• B)It provides the holder the right (but does not obliges him/her) to buy or sell a certain quantity of an underlying asset before its expiration.
• C)The greater the volatility of the underlier's price the less likely that the option will go "in the money" before it expires.
• D)Options help individuals to minimize their business risks by transferring it to others for a fixed time interval.

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Definitions:

Timeliness

The quality of completing or delivering something within the expected or agreed time.

Durability

The capacity of a material or object to resist degradation, pressure, or harm.

Equity

The principle of fairness in interactions, often focusing on distributing resources or opportunities equally among all individuals involved.

Privacy

The right of individuals to keep their personal information out of public view and to have control over their own personal data.