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Which of the following is true about option prices?
Suggested Answer: D
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premiums on options of volatile stocks are usually larger than on less volatile stocks. The likelihood of exercise increases with the volatility of a stock. Therefore, a higher premium is demanded.
12 comments · newest first
NI
Nicolette
11 months ago
I agree with A and C, but D feels a bit off to me.
BE
Benton
12 months ago
Wait, are we sure about B? Higher price doesn’t always mean higher premium.
MA
Maryln
12 months ago
D makes sense too; volatility usually drives up premiums.
KI
Kirk
12 months ago
I think C is spot on. Well-known companies attract more interest.
VA
Vanesa
1 year ago
A is definitely true! Listed stocks have more liquidity.
MO
Monte
1 year ago
I’m leaning towards D as well, but I’m a bit confused about how much volatility really affects the premiums compared to other factors.
GR
Gracia
1 year ago
I practiced a question similar to this, and I think C makes sense because well-known companies tend to have more demand.
ED
Edna
1 year ago
I’m not too sure, but I feel like A could be true since listed stocks have more liquidity.
HO
Hoa
1 year ago
I think I remember that option premiums are influenced by volatility, so maybe D is the right choice?
JE
Jerry
1 year ago
Okay, I think I've got this. Deposit insurance protects funds on deposit if the financial institution fails, and it can be provided by the FDIC or NCUA. So the answer is definitely A. Deposit Insurance.
MA
Man
1 year ago
Option D sounds like the best answer to me. Testing early helps identify and fix defects quickly, which reduces the overall cost of development.
CA
Cassandra
1 year ago
Ah, I remember learning about this in class. The three classes are owner/group/world, so I'll select option A.