If We Define the "Premium" on an Option to Be

question 12

True/False

If we define the "premium" on an option to be the difference between the price at which an option sells and the exercise value (or the difference between the stock's current market price and the strike price), then we would expect the premium to increase as the stock price increases, other things held constant.

---

Definitions:

Narcissism

A personality trait that is volatile, comprising self-love and an inflated or grandiose view of oneself.

Child Abuse

Acts of physical, emotional, or sexual mistreatment or neglect of a child by a caregiver or responsible person.

High Self-Esteem

A positive or favorable perception of oneself, reflecting a person's overall subjective emotional evaluation of their own worth.

Excitation-Transfer Model

A theory suggesting that the arousal generated by one event can be transferred and can intensify emotions in response to a subsequent event.