The intrinsic value of an option
A) is equal to the option premium.
B) is the amount the option actually is worth if it is immediately exercised.
C) is the amount the option is expected to be worth on its expiration date.
D) is impossible to determine in the absence of information on the future prices of the underlying asset.
B
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Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy's recovery from the Great Recession. Which is the most reasonable inference?
A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage. B) Businesses overestimated the strength of the recovery, which lead to overstocking of inventories. C) Financial constraints had forced businesses to contract inventories by more than they otherwise would have chosen. The period beginning in September 2009 reflects the attempt by businesses to correct this. D) Generally poor weather conditions in the final months of the year in the northern hemisphere make it less costly to store goods than to transport them to consumers.
Reducing _____ the benefits available to the buyer and seller and might also enable them to make exchanges that were previously impossible
a. transaction costs decreases b. transaction costs increases c. marginal costs decreases d. marginal costs increases