As the Variance of the Asset Price Decreases, the Value

question 247

Multiple Choice

As the variance of the asset price decreases, the value of a call option decreases because:

• A) Downside risk is virtually eliminated.
• B) The possible payoffs increase.
• C) Downside risk is virtually eliminated while the possible payoffs increase.
• D) Downside risk doesn't change but the possible payoffs decrease.
• E) It becomes more likely that the option will finish out of the money.

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Definitions:

Core Temperature

Core temperature refers to the temperature of the body’s internal environment, indicating the warmth of vital organs located within the body cavity.

Axillary Temperature

Body temperature measured in the armpit area, slightly lower than oral temperature readings.

Tympanic Membrane

Also known as the eardrum, it's a thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves.

Primary Care Provider

A healthcare practitioner who serves as the first point of consultation for all patients within the healthcare system, often responsible for ongoing healthcare management and referrals to specialists.