The Time Value of the Option Should

question 84

Multiple Choice

The time value of the option should:

• A)Decrease the longer the time to expiration.
• B)Increase the longer the time to expiration.
• C)Not change with time to expiration.
• D)Approach infinity at expiration.

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Definitions:

Business Failure

The cessation of operations and the inability of a company to continue financial performance due to various factors such as poor management or market conditions.

Receivership

A legal process in which a court appoints a receiver to manage the assets and business operations of a company that is in financial distress.

Pharmaceutical Company

A business entity focused on the research, development, production, and marketing of medications and medical treatments.

Product Innovation

The introduction of new or significantly improved goods or services in terms of their capabilities, components, or uses.