Which of the Following Statements Is True About Closing a Long

question 53

Multiple Choice

Which of the following statements is true about closing a long call position prior to expiration relative to holding it to expiration?

• A)the profit is greater at all stock prices
• B)the profit is greater only at low stock prices
• C)the profit is greater only at high stock prices
• D)the range of possible profits is greater
• E)none of the above are true

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Definitions:

Probabilities

Refers to the likelihood of different outcomes in an uncertain event, usually expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Degrees Of Freedom

The number of independent pieces of information in a dataset that are available for estimating a statistic, often related to the number of observations and the number of parameters being estimated.

Chi-square Statistic

A measure used in statistics to test hypotheses about the distribution of observations in different categories, based on the sum of squared discrepancies between observed and expected counts.

Null Hypothesis

The null hypothesis is a statement suggesting that there is no significant effect or difference for a specific experiment or study.