The Value of Both Call and Put Options Increases as the Variability

question 91

True/False

The value of both call and put options increases as the variability of the stock price decreases.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Maturity Value

The amount due to be paid at the end of a financial instrument's term, including both the principal and any accrued interest.

Stated Interest Rate

The interest rate specified on a loan or investment agreement, not accounting for compounding or fees.

Prevailing Rate

The current interest rate or wage rate for a particular industry or geographic location.