The Premium on an Existing Put Option Should ____ When

question 58

Multiple Choice

The premium on an existing put option should ____ when there is a reduction in the volatility of the underlying stock.

• A)be negative
• B)decline
• C)increase
• D)be unaffected
• E)be negative AND decline

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Definitions:

Early Adulthood

This life stage follows adolescence, typically involving individuals aged 20 to 40, characterized by increased independence, career establishment, and often the formation of long-term relationships.

Organ Reserve

The functional capacity of organs to withstand stress or damage beyond the usual physiological demands, often decreasing with age.

Homeostasis

The process through which living organisms naturally regulate themselves to keep stable while adapting to the best conditions for their survival.

Senescence

The biological process of aging, characterized by a gradual decline in the functional capacity of an organism's cells, tissues, and organs.