The Shorter the Time to the Expiration Date for a Currency

question 32

Multiple Choice

The shorter the time to the expiration date for a currency, the ____ will be the premium of a call option, and the ____ will be the premium of a put option, other things equal.

• A) greater; greater
• B) greater; lower
• C) lower; lower
• D) lower; greater

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Definitions:

Fiscal Year

A one-year period used for financial reporting and budgeting, which may or may not align with the calendar year.

Adjusting Entries

Journal entries made at the end of an accounting period to update income and expense accounts and ensure adherence to the accrual basis of accounting.

Adjusted Trial Balance

A record comprising all the accounts with their respective balances, revised after adjusting entries, employed in the preparation of financial documents.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in a net profit or loss.