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

---

Definitions:

Debilitating Chronic Illness

A long-term disease or condition that significantly impairs the physical or mental ability to perform daily activities.

Coping Mechanisms

Strategies or behaviors that individuals use to manage stress, deal with difficult situations, or adjust to psychological discomfort.

Prenatal Care

Healthcare provided to a pregnant woman to monitor and promote a healthy pregnancy and delivery.

Postpartum Depression

A type of mood disorder associated with childbirth, affecting some women, characterized by deep sadness, low energy, anxiety, and changes in sleeping or eating patterns.