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One of the Variables That Influences the Price of the Option

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One of the variables that influences the price of the option is the expected return on the stock.


Definitions:

Significance Level

The probability of rejecting the null hypothesis when it is true, used as a threshold in hypothesis testing.

Test Statistic

A standardized value derived from sample data during a hypothesis test that is used to make the decision about the null hypothesis.

Test Statistic

A value calculated from sample data that is used to evaluate the validity of a hypothesis.

Significance Level

The threshold at which a result is considered statistically significant, typically set at a p-value less than 0.05.

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