Q1. While most people think of options as great ways to speculate, they are also low-cost tools for hedging.

T/F

Q2. The one variable in option pricing we don't observe directly is the volatility, or risk component, of the option. Consequently, all else equal, volatility is crucial to determining the size of the option's time value, hence its premium.

T/F

Q3. We say that an (American) option is worth more alive than dead because one can always exercise a live option.