The Cumulative Probability Distribution Shows the Probability

question 15

Multiple Choice

The cumulative probability distribution shows the probability

• A)that a random variable is less than or equal to a particular value.
• B)of two or more events occurring at once.
• C)of all possible events occurring.
• D)that a random variable takes on a particular value given that another event has happened.

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Definitions:

Exercise Price

The price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying security or commodity.

Time Value

The portion of an option's price that exceeds its intrinsic value, reflecting the potential for further gain in value due to the remaining time until expiration.

At-The-Money

A term used in options trading to describe an option whose strike price is identical to the current market price of the underlying asset.

Call Option

An option contract granting the holder the privilege to buy an asset at a predetermined strike price until the expiration date.