The Measure of an Option's Price Sensitivity to a Change

question 4

Multiple Choice

The measure of an option's price sensitivity to a change in the interest rate is __________.

• A) Gamma
• B) Rho
• C) Theta
• D) Beta
• E) Vega

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Definitions:

Variable Costs

Expenditures that adjust according to the quantity of goods or services produced by an enterprise.

Fixed Costs

Regular outgoings that stay the same whether production or sales rates increase or decrease, for instance, rental costs or salary payments.

Net Income

This refers to the total profit of a company after all expenses and taxes have been deducted from total revenue.

Variable Cost

Costs that vary in proportion to the volume of goods or services produced, such as materials and labor.