How Does the Price of a Put Option Respond to the Following

question 119

Essay

How does the price of a put option respond to the following changes, other things being equal? Does the put price go up or down?
a. Stock price increases.
b. Exercise price increases.
c. Risk-free interest rate increases.
d. Expiration date of the option is extended.
e. Volatility of the stock price falls.
f. Time passes, so the option's expiration date comes closer.

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Definitions:

Goodwill Method

An accounting technique used to account for acquired companies over their tangible assets and liabilities, representing intangible assets like brand reputation or intellectual property.

Capital Balance

The amount of money that a person or entity has invested in a business, which may change over time due to profits, losses, and withdrawals.

Independent Appraisal

An objective evaluation of an asset's value, performed by a professional and unbiased third party, often used in financial reporting, transactions, and for legal matters.

Retires

The act of withdrawing from one's occupation or profession, often upon reaching a certain age.