PracticeQuiz content is free on an ad-supported model.

Unfortunately, we can't support ad blocker usage because of the impact on our servers. If you'd like to continue, please disable your ad blocker and reload page.

Reload page

FINRA Series 7

Category - Series 7

Start a Study Session Sign up for Question of the Day

Which of the following is true about option prices?

premiums on options for listed stocks are usually greater than on unlisted stocks
premiums on options of higher-priced stocks are usually greater than on lower-priced stocks
premiums on options of well-known companies are usually larger than on lesser-known companies
premiums on options of volatile stocks are usually larger than on less volatile stocks

Explanation

Answer: D - premiums on options of volatile stocks are usually larger than on less volatile stocks. The likelihood of exercise increases with the volatility of a stock. Therefore, a higher premium is demanded.

Was this helpful? Upvote!

Start a Study Session Sign up for Question of the Day

FINRA Series 7

Top questions

Related questions

Most popular on PracticeQuiz

Ad-Blocker not supported

FINRA Series 7

Top questions

Related questions

Most popular on PracticeQuiz