The Longer the Time Until Expiration of a Call Option,the

question 68

True/False

The longer the time until expiration of a call option,the lower the value of the option.

---

Definitions:

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, representing excess earnings over the normal rate of return.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, identical products, and no barriers to entry or exit, leading to efficient price determination.

Short Run

A period in which at least one factor of production is fixed and cannot be changed.

Purely Competitive Industry

A market structure characterized by many small firms producing identical products, with no single firm able to influence market prices.