An Increase in the Volatility of the Underlying Asset,all Other

question 74

Multiple Choice

An increase in the volatility of the underlying asset,all other things held constant,will ________ the option premium.

• A) increase
• B) decrease
• C) not affect
• D) Not enough information is given.

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Definitions:

Treasury Stock

Shares of a company's own stock that it has reacquired and held in the company's treasury.

Cost Per Share

The price at which a company's shares were initially offered to the public or the current market value of a share.

Stockholders' Equity

Represents the owners' residual interest in a corporation's assets after deducting liabilities.

Buy Back

A corporate action in which a company repurchases its own shares from the marketplace.