Which of the Following Is True of a Gap Option

question 10

Multiple Choice

Which of the following is true of a gap option

• A) The strike price determining whether a payoff is made is not the same as the strike price determining the size of the payoff
• B) There is a straightforward valuation formula similar to Black-Scholes-Merton
• C) It describes an option where there is a cost to exercising
• D) All of the above

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Definitions:

Labor Resources

The available human workforce; the people available for work and their skills, which are vital for the production of goods and services.

Agriculture

The process of tilling the land, planting crops, and breeding animals to produce food, materials, and various goods.

Investment Obstacles

Challenges or barriers that hinder the allocation of capital into projects or opportunities, potentially restricting economic growth and productivity.

Developing Nations

Refers to countries that are in the process of industrialization and have lower levels of economic prosperity, compared to developed nations.