Time Value of a European Option

question 17

Multiple Choice

time value of a European option

• A) is always positive for an out?of?the?money option
• B) is always positive for an in?the?money option
• C) is always positive for an at?the?money option
• D) decreases with the time that remains until the option expires

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Definitions:

Consumer Goods

Products and commodities bought and used by individuals and households for personal consumption.

Capital Goods

Long-lasting goods that are used in the production of other goods and services but are not themselves part of the end product.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Socialistic Economies

Economic systems where the production and distribution of goods and services are controlled by the state, aiming for equal wealth distribution and reduction of economic inequalities.