Which of the Following Statements Best Describes Options

question 12

Multiple Choice

Which of the following statements best describes options?

• A)An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value.
• B)As the stock's price rises, the time value portion of an option on a stock increases because the difference between the price of the stock and the fixed strike price increases.
• C)The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.
• D)The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger.

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Definitions:

Addictive Behaviors

Actions that are compulsively repeated and often increase in frequency or intensity due to their reinforcing consequences.

Dopamine Synapses

The junctions between neurons where dopamine, a neurotransmitter associated with pleasure and reward, is transferred.

Addictive Substances

Substances that can lead to addiction, characterized by a compulsive need to use despite harmful consequences.

Biologically Related

Being biologically related means sharing genetic material with another individual, typically through blood relations such as parent-child or siblings.