Consider a Black-Scholes Setting

question 28

Multiple Choice

Consider a Black-Scholes setting.When a call option is deep in-the-money,a decrease in interest rates results in,ceteris paribus,

• A)A decrease in the delta of the option.
• B)A decrease in the insurance value of the option.
• C)An increase in the intrinsic value of the option.
• D)A decrease in the time value of the option.

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Permanent Accounts

Accounts that carry their balances over into the next accounting period, including assets, liabilities, and equity accounts.

Trial Balance

A financial worksheet that consolidates all ledger balances into equal debit and credit column totals.

Prepaid Items

This term describes expenses paid in advance for goods or services to be received in the future, such as insurance or rent.