Both Call and Put Option Premiums Are Affected by the Level

question 107

True/False

Both call and put option premiums are affected by the level of the existing spot price relative to the strike price; for example, a high spot price relative to the strike price will result in a relatively high premium for a call option but a relatively low premium for a put option.

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Definitions:

Independent Variables

Factors in a study or simulation that are intentionally altered to see how they impact the variables that depend on them.

Multicollinearity

A condition in multiple regression where one predictor variable in a model can be linearly predicted from the others with a substantial degree of accuracy.

Regression Coefficient

A coefficient in a regression equation that represents the degree of change in the dependent variable for a one-unit change in an independent variable.

Durbin-Watson Statistic

A test statistic used to detect the presence of autocorrelation in the residuals from a regression analysis.