The Relationship Between the Option Price and the Exercise Price

question 11

Multiple Choice

The relationship between the option price and the exercise price is called

• A)the gamma
• B)the vega
• C)the omega
• D)the zeta
• E)none of the above

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Definitions:

Nominal Risk-free Return

The return on an investment without adjusting for inflation, representing the interest rate on a risk-free security.

Initial Cost

The expenditure incurred at the beginning of a project or investment, including capital investment and operational expenses when applicable.

Home Currency Approach

A method used in international finance where companies evaluate their foreign operations and transactions in their domestic currency.

Cash Inflows

The total amount of money being transferred into a business, typically from operations, investments, and financing activities.