If the Volatility of an Option Increases

question 138

Multiple Choice

If the volatility of an option increases:

• A) the value of a call option will increase,but a put option will decrease.
• B) the value of a call option will decrease,but a put option will increase.
• C) the value of a call option will decrease,and a put option will decrease.
• D) the value of a call option will increase,and a put option will increase.

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Definitions:

Null Hypothesis

The null hypothesis is a statement used in statistics that proposes there is no significant difference or effect, and any observed difference is due to sampling or experimental error.

Groups

In statistical analysis, groups refer to sets of subjects or data points categorized according to one or more variables for comparison or testing.

Critical Value

A threshold in hypothesis testing which the test statistic must exceed in order to reject the null hypothesis.