If the Exchange Rate's Volatility Is Rising, and Therefore the Risk

question 29

True/False

If the exchange rate's volatility is rising, and therefore the risk of the option not being exercised is decreasing, the option premium would be increasing.

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Definitions:

Psychology

The scientific study of the human mind and its functions, especially those affecting behavior in a given context.

Serial Processing

A method of information processing in which operations are carried out one after the other in a sequence.

Parallel Processing

The processing of many aspects of a problem simultaneously; the brain’s natural mode of information processing for many functions, including vision. Contrasts with the step-by-step (serial) processing of most computers and of conscious problem solving.

Consciousness

The quality or state of being aware of one's own existence, sensations, thoughts, surroundings, etc.