Identify the Five Variables That Affect the Value of an American

question 60

Essay

Identify the five variables that affect the value of an American put option and indicate how an increase in each of the variables will affect the value of the put.Also indicate the common name,if any,given to each variable.

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Definitions:

Legacies

Gifts or inheritances left to someone in a will.

Grantor Trust

A grantor trust is a legal entity in which the trust's creator maintains control over the assets and income, often leading to the income being taxed directly to the creator.

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Inter Vivos Trust

A legal arrangement where assets are transferred into a trust for the benefit of beneficiaries by the trustor during their lifetime.