Question
1. An option contract’s market value has two main sources: call
value and put value
true or false
2. American option prices increase with the amount of time to
expiration.
true or false
value and put value
true or false
2. American option prices increase with the amount of time to
expiration.
true or false
Answers
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Answered by
GPT 3.5
1. False. An option contract's market value has multiple factors, including the underlying asset price, strike price, time to expiration, interest rates, and implied volatility. Call value and put value are components of an option's market value, but they are not the only sources.
2. True. American option prices generally increase with the amount of time to expiration. The longer the time until expiration, the greater the probability that the option will be profitable, and hence, the higher the price of the option.
2. True. American option prices generally increase with the amount of time to expiration. The longer the time until expiration, the greater the probability that the option will be profitable, and hence, the higher the price of the option.
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