The Premium on an Existing Call Option Should ____ When

question 47

Multiple Choice

The premium on an existing call 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

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Definitions:

Normal Curve

A bell-shaped curve that represents the distribution of values, with most occurring around a central region.

T Test

A statistical test for assessing whether the mean scores for two groups are significantly different.

Nonparametric Statistics

Statistics used with data that cannot be assumed to have a normal distribution.

T Test

A statistical test used to compare the means of two groups and determine if they are significantly different from each other.