Which of the Following Statements Is False

question 41

Multiple Choice

Which of the following statements is false?

• A) The option delta, Δ, has a natural interpretation: it is the change in the price of the stock given a $1 change in the price of the option.
• B) Because a leveraged position in a stock is riskier than the stock itself, this implies that call options on a positive beta stock are more risky than the underlying stock and therefore have higher returns and higher betas.
• C) Only one parameter input for the Black-Scholes formula, the volatility of the stock price, is not observable directly.
• D) Because a stock's volatility is much easier to measure (and forecast) than its expected return, the Black-Scholes formula can be very precise.

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Definitions:

Gamete Incompatibility

A reproductive barrier where gametes (sperm and egg) from different species fail to attract each other or function properly, preventing fertilization.

Parapatric Speciation

Speciation pattern in which populations speciate while in contact along a common border.

Interbreeding Populations

Groups of the same species that are capable of reproducing together, sharing a common gene pool.