All Other Things Held Constant,premiums on Call Options Will Increase

question 65

Multiple Choice

All other things held constant,premiums on call options will increase when the

• A) exercise price falls.
• B) volatility of the underlying asset falls.
• C) term to maturity decreases.
• D) futures price increases.

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Definitions:

Higher Order Conditioning

A learning process whereby a stimulus that has been conditioned to produce a particular response is used in turn to condition a second stimulus to produce the same response.

Extinction

In psychology, the gradual weakening and eventual disappearance of a conditioned response.

Shaping

A behavioral psychology technique that reinforces behavior closer and closer to a desired goal, used in teaching new behaviors.

Step-by-step Reinforcement

The process of enhancing desired behaviors through a systematic approach that rewards successive approximations of the target behavior.