Which of the Following Statements Is True

question 92

Multiple Choice

Which of the following statements is true?

• A) More risk leads to higher option values.
• B) More risk leads to lower option values.
• C) Options are characterized by equal payoffs.
• D) All of the above statements are true.
• E) None of the above statements is true.

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Definitions:

Required Reserve Ratios

The fraction of deposits that regulators require a bank to hold in reserve and not lend out, to ensure bank liquidity.

Financial Markets

Banks and other financial institutions that facilitate the flow of funds from savers to borrowers.

Discount Rate

The interest rate set by central banks that they charge commercial banks for loans and advances, influencing monetary conditions and economic indicators like inflation and investment.

Government Securities

Financial instruments issued by a government to borrow money from investors, often with a promise to pay periodic interest and repay the principal at maturity.