The Vega of an Option Measures

question 70

Multiple Choice

The vega of an option measures:

• A)interest rate risk
• B)volatility risk
• C)off-balance-sheet risk
• D)price elasticity

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Definitions:

Context Effects

Refers to how the context in which a stimulus occurs can affect the perception of this stimulus.

Perceptual Adaptation

The ability of the body to adjust to an environment by filtering out distractions, allowing for greater focus on particular stimuli.

Perceptual Set

A mental predisposition to perceive one thing and not another, influenced by expectations, emotions, and culture.

Bottom-Up Processing

A type of information processing that begins with sensory input and builds up to the formation of perception in the brain.