Which of the following is true of an option?
a. It is based on market volatility and thus assures a high profit to risk preferring individuals.
b. It provides the holder the right (but does not obliges him/her) to buy or sell a certain quantity of an underlying asset before its expiration.
c. The greater the volatility of the underlier's price the less likely that the option will go "in the money" before it expires.
d. Options help individuals to minimize their business risks by transferring it to others for a fixed time interval.
B
You might also like to view...
If the marginal propensity to consume (MPC) is 0.75 and if policy makers wish to increase real GDP by $300 million to fight a recession, then by how much would taxes have to change?
a. -$30 million b. -$50 million c. -100 million d. -300 million
A labor-leisure budget constraint is represented on a graph as a: a. horizontal line
b. vertical line. c. downward-sloping straight line. d. upward-sloping straight line.