Question
Which of the following statements is most correct? Question 19 options: An option's value is determined by its exercise value, which is the market price
Which of the following statements is most correct?
Question 19 options:
| An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value. |
| As stock price rises, the premium portion of an option on a stock increases because the difference between the price of the stock and the fixed striking price increases. |
| Issuing options provides companies with a low cost method of raising capital. |
| The market value of an option depends in part on the option's time to maturity and on the variability of the underlying stock's price. |
| The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started