Which of the Following Will Cause a Decrease in the Value

question 19

Multiple Choice

Which of the following will cause a decrease in the value of the respective derivative?

• A) an increase in volatility for a call option
• B) a decrease in volatility for a call option
• C) an increase in the length to expiration for a call option
• D) an increase in the length to expiration for a put option

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Definitions:

Fair Die

A die that is perfectly balanced, ensuring that each of its faces has an equal likelihood of landing up when thrown.

Probability

A rephrased definition: A statistical metric that quantifies the chance that a specific event or outcome will happen.

Likely Viewer

A term used to describe someone who is considered a probable audience member for a particular television show, movie, or event based on certain criteria.

Unlikely Viewer

A person or demographic that is not expected to be interested in viewing certain content or media.