Unless far out-of-the money or far in-the-money, for otherwise identical call options, the longer the term...
Unless far out-of-the money or far in-the-money, for otherwise identical call options, the longer the term to expiration, the lower the price for
A. Both European Call Option and American Call options
B. American call options, but not European call options.
C. Neither European call options nor American call options
Homework Answers
Longer-term calls, both American and European, typically have
more value than short-term calls because there is more time to have
an event that can occur to make them go in the money.
Hence option C is most apt.
A is wrong because longer the time period more is the value of
both calls.
B is wrong because both american as well as Europen call options
shall have more value.
Add Answer to:
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Q1. Indicate all the options
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at-the-money.
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Indicate the official expiration dates of the
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