An Option That Gives the Buyer the Right to Exercise

question 5

Multiple Choice

An option that gives the buyer the right to exercise at any time up to the expiry date is called:

• A)a put option.
• B)an American-type option.
• C)a call option.
• D)a European-type option.

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Definitions:

Degrees of Freedom

The number of independent pieces of information used in the calculation of a statistic, often representing the number of values free to vary.

T Distribution

A probability distribution used in statistical analysis when the sample size is small and the population standard deviation is unknown.

Standard Deviation

A measure that quantifies the variance or dispersion of a set of data points from their mean; indicating how spread out the data points are.

Confidence Interval

A sequence of statistical values, derived from a sample analysis, likely to capture the undisclosed value of a population characteristic.