This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Which of the following factors would tend to increase the size of the premium on an options ... (Read 11 times)

laurencescou

  • Hero Member
  • *****
  • Posts: 593
on: Jun 30, 2018
Which of the following factors would tend to increase the size of the premium on an options contract?
 
  A) The option is near its expiration date.
  B) The current default-risk-free interest rate is high.
  C) The price volatility of the underlying asset is low.
  D) The option is far away from its expiration date.

Question 2

According to the Lucas critique, what is the proper way to evaluate a proposal that reduces government borrowing by raising taxes and reducing government spending?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Swizqar

  • Sr. Member
  • ****
  • Posts: 357
Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

The Lucas critique emphasizes that changes in economic policy are likely to affect expectations of future policy and economic conditions, and such expectations have a strong impact on the behavioral response to the policy. Though aggregate income is reduced when taxes rise and government spending is reduced, people might expect that the reduction in government borrowing will lead to better economic conditions in the future. Proper policy evaluation must recognize that such optimism can counter the decrease in aggregate demand that might otherwise occur.


laurencescou

  • Hero Member
  • *****
  • Posts: 593
Reply #2 on: Jun 30, 2018
Thank you


Swizqar

  • Sr. Member
  • ****
  • Posts: 357
Reply #3 on: Jun 30, 2018
No problemo


« previous next »
 

Did you know?

There are 60,000 miles of blood vessels in every adult human.

Did you know?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

Did you know?

According to the FDA, adverse drug events harmed or killed approximately 1,200,000 people in the United States in the year 2015.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Many people have small pouches in their colons that bulge outward through weak spots. Each pouch is called a diverticulum. About 10% of Americans older than age 40 years have diverticulosis, which, when the pouches become infected or inflamed, is called diverticulitis. The main cause of diverticular disease is a low-fiber diet.

Risk factors for falls Risk factors for falls
Young adults increase in self-esteem between the ages of 18 and 25, according to this longitudinal s Young adults increase in self-esteem between the ages of 18 and 25, according to this longitudinal s
The “Infertility Belt” In certain countries in Central Africa, infertility rates are as high as 30% The “Infertility Belt” In certain countries in Central Africa, infertility rates are as high as 30%
Physiological Factors Affecting Blood Pressure Physiological Factors Affecting Blood Pressure
IPCC Temperature Increase Predictions Relative to 1986-2005 IPCC Temperature Increase Predictions Relative to 1986-2005
IPCC Temperature Increase Predictions Relative to 1986-2005 IPCC Temperature Increase Predictions Relative to 1986-2005
Video: Primary Active Transport - electrochemical gradient and ion transport / water movement

For a complete list of videos, visit our video library