Which of the Following Factors Would Tend to Increase the Size

question 34

Multiple Choice

Which of the following factors would tend to increase the size of the premium on an options contract?

• A)The option is near its expiration date.
• B)The current default-risk-free interest rate is high.
• C)The price volatility of the underlying asset is low.
• D)The option is far away from its expiration date.

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Definitions:

Recession

A phase of short-term economic downturn characterized by a decrease in commerce and manufacturing, typically marked by two consecutive quarters of declining gross domestic product (GDP).

Inflation

The pace at which prices for general goods and services climb, reducing the value of money to buy them.

Spreadsheets

Digital tools or applications used to organize, analyze, and store data in tables, often utilized for accounting, planning, and data analysis.

Household Budget

An estimate of an individual's or family's income and expenses over a specified period, used for managing personal finances.