A Bond Investor Is More Likely to Exercise a Put

question 15

Multiple Choice

A bond investor is more likely to exercise a put option in a bond contract if:

• A)market interest rates increase.
• B)market interest rates decrease.
• C)the default risk of a bond decreases.
• D)good news about the bond issuer financial position has been released.

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Definitions:

Cognitive Theory

A theory of psychology that emphasizes internal processes such as thinking, problem-solving, and information processing in understanding behavior.

Dreaming

A series of thoughts, images, and sensations occurring in a person's mind during sleep, often associated with REM sleep phases.

Daytime Thinking

Cognitive processes and activities that occur during the day, including problem-solving, decision-making, and planning.

Hypnosis

A mental state of heightened suggestibility, often induced by a hypnotic induction technique, which can lead to changes in perception, memory, and voluntary action.