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:

Reasonable Assurance

An acceptable level of certainty or confidence in the accuracy of financial statements, provided by internal controls.

Petty Cash Fund

A small amount of cash on hand used for covering minor or incidental expenses in a business.

Cash Short

A situation where the actual amount of cash on hand is less than the recorded amount in the accounting records.

Journal Entry

An accounting record of a business transaction, indicating the financial effects on the company's accounts.