How Does the Price of a Put Option Respond to a Stock

question 18

Multiple Choice

How does the price of a put option respond to a stock price increase?

• A)Increases
• B)Decreases
• C)Remains the same
• D)Goes to zero

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

Reserve Requirements

Mandatory regulations set by central banks determining the minimum amount of reserves that must be held by commercial banks, ensuring they have enough cash on hand to meet withdrawal demands.

Monetary Policy

The process by which a central bank or monetary authority manages the money supply and interest rates to achieve economic objectives.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that borrowers pay to lenders over a specified period.