A Decrease in Which of the Following Will Increase the Value

question 70

Multiple Choice

A decrease in which of the following will increase the value of a put option on a stock?
I.time to expiration
II.stock price
III.exercise price
IV.risk-free rate

• A)III only
• B)II and IV only
• C)I and III only
• D)I, II, and III only
• E)II, III, and IV only

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Definitions:

Libido

A term often used to describe sexual drive or desire.

Freudian Theory

A set of psychoanalytic theories developed by Sigmund Freud that emphasize unconscious processes, childhood experiences, and defense mechanisms in shaping personality.

Psychic Energy

A Freudian concept referring to the power stemming from innate drives and used by the mind for psychological activities.

Reaction Formation

A psychological defense mechanism where an individual acts in the opposite way to their unacceptable impulses, often exhibiting exaggerated behavior.