Which of the Following Is True

question 10

Multiple Choice

Which of the following is true?

• A) As volatility increases, call values increase and put values decrease.
• B) As volatility increases, call values decrease and put values increase.
• C) As volatility increases, the values of both call and put options decrease.
• D) As volatility increases, the values of both call and put options increase.
• E) Call and put values are independent of volatility.

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Definitions:

Base Year

A specific year chosen as a point of reference or benchmark for economic or financial calculations, such as indexing or comparing prices.

Current Year

The ongoing calendar year during which an event or measurement is taking place.

Laspeyres Price Index

An index that measures the change in the price of a basket of goods and services based on the quantities purchased in a base period.

Base Year

A specific year against which economic or financial data is compared to assess changes or growth over time.