An Increase in Which Two of the Following Will Have

question 71

Multiple Choice

An increase in which two of the following will have a negative effect on the value of a put option?
I. risk-free interest rate
II. time to option maturity
III. underlying stock price
IV. option strike price

• A)I and II only
• B)I and III only
• C)II and III only
• D)II and IV only
• E)III and IV only

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Definitions:

Variables Controlled

In experiments, these are the factors that researchers keep constant to prevent them from influencing the outcome of the study.

Confounding Variable

An external variable that influences both the dependent and independent variables, making the relationship between them less clear.

Illegal Drug Use

The consumption of substances that are prohibited by law.

Proxy Variable

An alternative that is used to stand in for a variable that cannot be directly measured or is not readily available.