The Premium on an Existing Put Option Should ____ When

question 53

Multiple Choice

The premium on an existing put option should ____ when there is an increase in the expected short-term volatility of the stock price.

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

---

Definitions:

Fixed Costs

Business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales volume.

Process Configuration

The arrangement and organization of operational processes and resources in a production or service system to optimize performance.

Intermittent Processes

Describes production or operational processes that are not continuous but occur at intervals or irregularly.