An Increase in the Variance of the Return on the Underlying

question 349

True/False

An increase in the variance of the return on the underlying asset will increase the value of a call option.

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Definitions:

Critical Thinking

The process of objectively analyzing and evaluating an issue to form a judgment.

Specific

Clearly defined or identified; precise or particular in detail.

Step-By-Step Sequence

A detailed process or set of instructions presented in a clear, logical order to follow in order to achieve a specific outcome or complete a task.

Interpretation

The action of explaining the meaning of something or presenting one's own conception of a piece of information or artwork.