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:

Ambrosia

In mythology, it is the food or drink of the gods, thought to confer immortality, but in a general context, it refers to something very pleasing to taste or smell.

Seafloor Spreading

The process by which new oceanic crust is formed at mid-ocean ridges and moves away from the ridge, contributing to continental drift.

Subduction

When tectonic plates converge, the movement of one plate beneath another into the mantle is referred to as subduction.

Continental Margins

The zones of the ocean floor that separate the thin oceanic crust from thick continental crust, including the continental shelf, slope, and rise.