While Ever an Option Is Out of the Money, Time

question 125

True/False

While ever an option is out of the money, time works gradually in the favour of the seller.

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Definitions:

Benchmark

A standard or point of reference against which the performance of an investment or mutual fund can be measured.

Foreign Exchange Risk

The risk of losing money due to unfavorable changes in exchange rates affecting investments or transactions in foreign currencies.

Translation Exposure

The risk faced by multinational companies that financial statements in foreign currencies may fluctuate due to changes in exchange rates.

Hedging Risk

Hedging risk is a strategy used to reduce or eliminate the risk of loss from fluctuations in the prices of assets, currencies, or commodities, often through derivatives like options or futures.