The Premium on an Existing Put Option Should ____ When

question 53

Multiple Choice

The premium on an existing put option should ____ when there is an increase in the expected short-term volatility of the stock price.

• A) be negative
• B) decline
• C) increase
• D) be unaffected
• E) A and B

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Definitions:

Aversion Therapy

A form of psychological treatment in which an undesirable behavior is paired with an unpleasant stimulus to reduce the frequency of the behavior.

Transvestic Disorder

A condition characterized by an intense sexual arousal from cross-dressing, which may cause distress or impairment in functioning.

Exhibitionist

An individual who exposes their genitals to strangers in public settings for sexual gratification or due to a psychological condition.

Gender Dysphoria

Discomfort or distress that is caused by a discrepancy between a person's gender identity and that person's sex assigned at birth.