​The Greater the Variability of a Currency, the ____ Will

question 59

Multiple Choice

​The greater the variability of a currency, the ____ will be the premium of a call option on this currency, and the ____ will be the premium of a put option on this currency, other things being equal.

• A) ​greater; lower
• B) ​greater; greater
• C) ​lower; greater
• D) ​lower; lower

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Definitions:

System of Equations

A set of two or more equations with the same set of unknowns, which are solved together to find a common solution.

Method of Substitution

A technique used to solve systems of equations where one equation is solved for one variable, which is then substituted into other equations.

Hyperbola

A type of smooth curve lying in a plane, defined by its geometric properties or by equations that are not necessarily of the second degree. Specifically, it refers to a conic section that is not a circle, ellipse, or parabola.

Center and Vertices

Terms related to conic sections; the center is a central point of the shape, while vertices are points where the curve intersects its principal axis.