The Premium on an Existing Call Option Should ____ When

question 72

Multiple Choice

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

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

---

Definitions:

Generalization

The tendency to apply learned behavior to similar situations, beyond the original conditions of learning.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or gender.

Biofeedback Training

A technique that teaches individuals to improve their health by controlling certain bodily processes that normally happen involuntarily.

Counterconditioning

Counterconditioning is a therapy technique used to replace negative or harmful responses to a stimulus with positive ones.