The Premium of a Currency Put Option Should Increase If

question 43

Multiple Choice

The premium of a currency put option should increase if:

• A) the volatility of the underlying asset increases.
• B) the spot rate increases.
• C) the volatility of the underlying asset increases AND the spot rate increases.
• D) None of these are correct.

---

Definitions:

Balance of Payments

A comprehensive record of all economic transactions between the residents of a country and the rest of the world in a specific period.

Financing

The process of providing funds for business activities, making purchases, or investing, through various means such as loans, equity investments, or lines of credit.

International Trade

The exchange of goods, services, and capital between countries, driven by comparative advantages and leading to increased economic efficiency.

Foreign Currencies

These are the currencies of other countries, traded in foreign exchange markets and used in international transactions.