All Other Things Held Constant,premiums on Put Options Will Increase

question 39

Multiple Choice

All other things held constant,premiums on put options will increase when the

• A) exercise price increases.
• B) volatility of the underlying asset falls.
• C) term to maturity increases.
• D) A and C are both true.

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Definitions:

Bill Of Exchange

An instrument in writing, signed by the drawer and addressed to the drawee, ordering the drawee to pay a sum certain in money to the payee named therein (or bearer) at some fixed or determinable future time, or on demand.

Drawer

In the context of banking and finance, the individual or entity that writes and signs a check, thereby instructing the bank to pay the stated amount to another party.

Acceptor

In the context of banking and finance, an entity that accepts a bill of exchange or draft, agreeing to pay the amount to the holder at a specified date.

Endorser

An individual or entity that signs and backs a document, often a negotiable instrument, indicating their support and assurance.