The Value of an Option Is Dependent Upon the Value

question 73

Multiple Choice

The value of an option is dependent upon the value of the underlying security.This relationship defines an option as which one of the following?

• A) equity security
• B) fixed income security
• C) derivative security
• D) transfer security
• E) dependent security

---

Definitions:

Estimator

A rule or formula that provides a means to calculate an estimate of a given parameter from sample data.

Parameter

A value that summarizes a characteristic of a population or a statistical model.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter, expressed with a certain level of confidence.

Confidence Level

A confidence level is a statistical parameter that expresses how certain one is in the results of a statistical experiment, often represented as a percentage that quantifies the probability that the true parameter lies within the confidence interval.