Investor a Bought a Call Option and Investor B Bought

question 56

Multiple Choice

Investor A bought a call option and Investor B bought a put option. All else equal if the underlying share price volatility increases the value of Investor A's position will ________ and the value of Investor B's position will ________.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

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Longitudinal Research

The study of developmental processes by taking repeated measures of the same group of participants at various stages of development.

Mental Abilities

The capacity to perform cognitive tasks, process information, and understand complex ideas.

Cross-Sectional Research

The study of developmental processes by taking measures of participants of different age groups at the same time.