With Everything Else Constant, as the Expiration Date Gets Closer

question 52

Multiple Choice

With everything else constant, as the expiration date gets closer, what happens to the value of call and put options?

• A) Call option will be worth more, put options will be worth less.
• B) Call option will be worth less, put options will be worth more.
• C) Both call and put options will be worth more.
• D) Both call and put options will be worth less.

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Definitions:

Relative Deprivation

A psychological experience of discontent felt by people who believe they are worse off than others or lack resources or advantages that others have.

More Affluent

Having a greater amount of wealth or resources; typically used to describe individuals or areas with a higher economic status.

Downward Mobility

The phenomenon where individuals or groups experience a decline in their socioeconomic status.

Federal Poverty Line

Federal index that defines “official” poverty in the United States based on household income; updated annually.