Select the Most Accurate Alternative

question 18

Multiple Choice

Select the most accurate alternative.The theta of an in-the-money cash-or-nothing call option is

• A)Positive,as is the case for any call.
• B)Positive,because payoffs are the same once you are in-the-money and more time to maturity only increases the possibility of moving out of the money.
• C)Negative,because payoffs are the same once you are in-the-money and more time to maturity only increases the possibility of moving out of the money.
• D)Negative,as is the case for any call.

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Definitions:

Instalment Payments

Payments made regularly over a period of time to settle a debt.

Periodic Amounts

Regularly scheduled payments or receipts over a defined period.

Interest

The cost of borrowing money or the return on investment for savings and investments, typically expressed as an annual percentage rate.

Liquidity Ratios

Financial metrics used to assess a company's ability to meet its short-term debt obligations, by comparing current assets to current liabilities.