The Time Value of a European Option

question 17

Multiple Choice

The 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:

Memory Trace

The physical record in the nervous system that preserves a memory.

Motivated Forgetting

Motivated forgetting is a psychological process where an individual unconsciously or consciously blocks out painful, embarrassing, or undesirable memories.

Ribot's Law

a principle stating that individuals lose their most recent memories first when they suffer from amnesia.

Faces

Refers to the front part of a person's head, from the forehead to the chin, including eyes, nose, and mouth, often recognized for its role in identity and expression.