Which of the Following Statements Are Correct

question 72

Multiple Choice

Which of the following statements are correct?
I.Increasing the time to maturity may not increase the value of a European put.
II.Vega measures the sensitivity of an option's value to the passage of time.
III.Call options tend to be more sensitive to the passage of time than are put options.
IV.An increase in time decreases the value of a call option.

• A)I and III only
• B)II and IV only
• C)II, III, and IV only
• D)I, III, and IV only
• E)I, II, III, and IV

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Definitions:

Lump-Sum Tax

A tax that is a fixed amount, not dependent on the taxpayer's income or activity level.

Advantages

Benefits or strengths that give an entity a favorable or superior position relative to competitors or alternatives.

Disadvantages

The negative aspects or conditions that can lead to unfavorable outcomes or reduce effectiveness in a given context.

Efficient Tax

A tax imposed in such a way that it creates the least possible distortion or inefficiency in the market or economy.