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PRMIA Exam 8006 Topic 9 Question 69 Discussion
Actual exam question for
PRMIA's
8006 exam
Question #: 69
Topic #: 9
[All 8006 Questions]
Topic #: 9
Which of the following statements is true:
1. The maximum value of the delta of a call option can be infinity
II. The value of theta for a deep out of the money call approaches zero
III. The vega for a put option is negative
IV. For a at the money cash-or-nothing digital option, gamma approaches zero
Suggested Answer:
A
Over the counter and electronic communication networks match buyers and sellers. However, there is no market making function, ie, in periods of stress liquidity may completely disappear from these markets. Exchanges normally have market makers that are required to present two way quotes on the securities they are making the market for. Therefore Choice 'a' is the correct answer.
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