A Cash-Or-Nothing Call Option Written on a Stock

question 14

Multiple Choice

A cash-or-nothing call option written on a stock

• A)Pays the value of the stock in cash if the option finishes in-the-money and nothing otherwise.
• B)Pays a fixed amount of cash if the option finishes in-the-money and nothing otherwise.
• C)Is any cash-settled standard call option.
• D)Pays the difference between the stock price and strike price in cash to the option holder if the option should finish in-the-money and nothing otherwise.

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Definitions:

General Ability

General ability refers to the overall cognitive capacity of an individual, including elements such as memory, reasoning, problem-solving, and intelligence.

Intelligence

The capacity for absorbing lessons from past encounters, addressing difficulties, and leveraging insight to adapt to fresh scenarios.

Charles Spearman

A psychologist known for his work in statistics and intelligence, including the theory of general intelligence (g factor).

General Intelligence

The theory suggesting the existence of a single, underlying intellectual capacity that influences performance across various cognitive tasks.