The Premium of a Currency Put Option Will Increase If

question 150

Multiple Choice

The premium of a currency put option will increase if:

• A) the volatility of the underlying asset goes up.
• B) the time to maturity goes up.
• C) the spot rate declines.
• D) none of the above

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Definitions:

Constraint

A limitation or restriction in a system that can affect performance and output, often in the context of production or project management.

Linear Programming

A mathematical method used to find the best outcome in a model whose requirements are represented by linear relationships.

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Constraints

Limitations or restrictions that impact the decision-making process, often used in the context of optimization problems and project planning.