Other Things Equal,after an Option First Becomes Available in the Market

question 27

Multiple Choice

Other things equal,after an option first becomes available in the market,

• A)its time value approaches zero.
• B)its time value increases into maturity.
• C)the volatility of the stock is negatively related to the value of the call.
• D)if it is out of the money,it will have no time value.

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Definitions:

Depositors

Individuals or entities that place money into a bank account for safekeeping and potential interest accrual.

Negotiation

A discussion aimed at reaching an agreement.

Transfer

The act of moving assets, rights, or obligations from one party to another through sale, gift, or other means.

Possession

The control or ownership of something, whether personal property or real estate.