Which of the Following Factors Would Tend to Increase the Size

question 34

Multiple Choice

Which of the following factors would tend to increase the size of the premium on an options contract?

• A)The option is near its expiration date.
• B)The current default-risk-free interest rate is high.
• C)The price volatility of the underlying asset is low.
• D)The option is far away from its expiration date.

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Definitions:

Prerecorded Voice

Involves automated messages delivered via telephone without the need for a live speaker.

Automatic Telephone Dialing System

Technology that can dial numbers without human intervention, often used in telemarketing.

Truth-in-Lending Act

U.S. federal law designed to promote transparency in consumer credit by requiring lenders to disclose important terms and costs of loans to borrowers.

Secured by Mortgage

Describes a loan or obligation guaranteed with the collateral of real estate property through a legal agreement.