The Premium on an Existing Call Option Should ____ When

question 58

Multiple Choice

The premium on an existing call option should ____ when the underlying stock price decreases.

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

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Definitions:

Subjective Interpretation

An individual's personal, biased understanding of a concept, message, or situation, influenced by emotions, beliefs, and experiences.

Sensory Receptors

Cells or organs tuned to respond to specific stimuli in the environment, such as light, sound, or pressure, and convert them into electrical impulses.

Perception

The cognitive process of interpreting and organizing sensory information from the environment to understand and interact with it.

Sensation

Registration by the sensory organs of physical stimuli from the environment.