Which of the Following Factors Is NOT Generally Regarded as a Major

question 95

Multiple Choice

Which of the following factors is NOT generally regarded as a major determinant of the price of an option?

• A) The spot price of the underlying asset, relative to the option exercise price
• B) The elapsed time since the start of the option
• C) The volatility of the spot price of the underlying asset
• D) The level of interest rates

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Definitions:

Purchase Order

A formal document issued by a buyer to a seller, authorizing the purchase of goods or services as specified at agreed-upon terms.

Fair-Value Hedge

A hedge that protects against changes in the fair value of an asset, liability, or firm commitment that is attributable to a particular risk.

Forward Contract

A derivative financial instrument where two parties agree to buy or sell an asset at a predetermined future date and price.

Spot Rates

The current price at which a particular security, currency, or commodity can be bought or sold for immediate delivery.