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6.When the time to maturity increases with all else remaining the same, which of the following is true?
A.European options always increase in value
B.The value of European options either stays the same or increases
C.There is no effect on European option values
D.European options are liable to increase or decrease in value
A.European options always increase in value
B.The value of European options either stays the same or increases
C.There is no effect on European option values
D.European options are liable to increase or decrease in value
Answer: D
When the time to maturity increases from X to Y, European options usually increase in value. But they can decrease in value if a big dividend expected between X and Y.
When the time to maturity increases from X to Y, European options usually increase in value. But they can decrease in value if a big dividend expected between X and Y.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015