Which of the Following Is NOT Valid About the Time

question 9

Multiple Choice

Which of the following is NOT valid about the time decay of European put and call options with the same strike and maturity?

• A) The time decay is measured in dollars per unit time.
• B) The call decays at the same rate as the put.
• C) The call decays faster than the put.
• D) The difference between the time decay of decay of the call and put depends on the moneyness of the options.

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Definitions:

Scientific Process

A systematic and empirical approach to research in which the researcher generates a hypothesis, collects data through observation and experimentation, and then analyses the data to draw conclusions.

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Refers to the ongoing process of creating, testing, and refining concepts and propositions that aim to explain phenomena within a certain field.

Observation

The process of monitoring or recording systematically selected behaviors, phenomena, or variables for the purpose of analysis.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation.