When an Option Is Exercised,the Party Exercising the Option Has

question 32

Multiple Choice

When an option is exercised,the party exercising the option has a profit equal to:

• A)the cash flow resulting from the exercise of the option.
• B)the cash flow resulting from the exercise of the option less the premium paid for the option.
• C)the premium originally paid for the option.
• D)the cash flow resulting from the exercise of the option plus any savings resulting from changes in exchange rates.

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Definitions:

Test Statistic

A calculated value from sample data used in hypothesis testing to determine whether to reject the null hypothesis.

Calculated Value

A numeric value derived from mathematical operations on data or parameters.

Population Variances

A measure of the dispersion of all the values in a population, reflecting how much the individuals within the population differ from the population mean.

Equal Variances

An assumption in certain statistical tests that the variance within each of the groups or samples is the same across all groups or samples.