How Does the Price of a Put Option Respond to an Interest

question 82

Multiple Choice

How does the price of a put option respond to an interest rate increase?

• A)Increases
• B)Decreases
• C)Remains the same
• D)Goes to zero

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Definitions:

Annual Interest Rate

The percentage of principal charged as interest for its use over the span of one year.

Summer Wages

Compensation paid to employees for work performed during the summer season, often applied to temporary or seasonal positions.

Compounded Quarterly

Interest calculation method where interest is added to the principal sum so that each following period's interest is calculated on a growing principal.

Annual Interest

The amount of interest to be paid or earned over a one-year period, usually expressed as a percentage of the principal.