The Value of an Option Is Equal to The

question 37

Multiple Choice

The value of an option is equal to the:

• A) intrinsic value minus the time premium.
• B) time premium plus the intrinsic value.
• C) implied standard deviation plus the intrinsic value.
• D) summation of the intrinsic value, the time premium, and the implied standard deviation.
• E) summation of delta, theta, vega, and rho.

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Definitions:

Inhalation

The process of drawing air into the lungs, a vital part of the respiratory cycle that allows for oxygen absorption into the bloodstream.

Diaphragm

Sheet of smooth muscle between the thoracic and abdominal cavities; contracts during inhalation.

Inhalation

The act of breathing in, whereby air (including oxygen) is drawn into the lungs, facilitating gas exchange with the bloodstream.

Exhalation

The process of breathing out, where carbon dioxide is expelled from the lungs.