Which of the Following Statements Best Describes Options

question 12

Multiple Choice

Which of the following statements best describes options?

• A)An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value.
• B)As the stock's price rises, the time value portion of an option on a stock increases because the difference between the price of the stock and the fixed strike price increases.
• C)The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.
• D)The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger.

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Definitions:

Linehaul Truck

A type of truck specifically designed for transporting freight over long distances, typically between cities or over national borders.

Transmission Housing

The outer shell or casing that encloses the components of a transmission, providing protection and structural support.

Pressurized

The state of having been subjected to pressure or compressed, often referring to gases or fluids within a sealed environment.

Range Cylinder

A component in hydraulic or pneumatic systems that determines the range of motion or force output by varying its internal pressure or volume.