23-79 for Put Options,the Delta Has a Negative Sign

question 4

Multiple Choice

23-79 For put options,the delta has a negative sign

• A)since the value of the put option falls when bond prices rise.
• B)since the value of the put option rises when bond prices rise.
• C)since the value of the put option falls when bond prices fall.
• D)since the change in interest rates is equal to the change in the interest rate on the bond underlying the option contract.
• E)to adjust for basis risk.

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Definitions:

Optimal R&D

The most efficient level of investment in research and development activities where marginal costs equal marginal benefits, maximizing net benefits.

Expected-Rate-Of-Return

The anticipated return on an investment, predicting future profit or loss.

Interest-Rate Cost-Of-Funds

The cost incurred by a financial institution to acquire the funds that it lends out to its customers, which is often influenced by prevailing market interest rates.

Marginal Cost

The rise in cost due to the production of an extra unit of a product or service.