Higher Volatility in the Underlying Asset's Price Has a Negative

question 18

True/False

Higher volatility in the underlying asset's price has a negative impact on option prices because it indicates greater risk.

---

Definitions:

Total Revenue

The total income generated by a firm from the sale of its goods and services, calculated as the selling price per unit times the number of units sold.

Variable Costs

Costs that change in proportion to the level of activity or production volume, such as materials and direct labor.

Average Total Cost

The sum of all production costs (both fixed and variable) divided by the total amount of goods produced.

Average Variable Cost

The total variable costs (costs that change with production levels) divided by the quantity of output produced, representing the per-unit variable cost.