Consider the Following Compound Options Written on an Underlying Stock

question 29

Multiple Choice

Consider the following compound options written on an underlying stock. Which one decreases in value when the stock falls in price?

• A) A put on a call.
• B) A call on a put.
• C) A put on a put.
• D) None of the above.

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Definitions:

Abnormal

Refers to patterns of behavior, thought, or emotion considered to be outside the norm or dysfunctional.

Psychodynamic Model

A framework in psychology that emphasizes the influence of unconscious drives and forces on human behavior.

Repressed Thoughts

Repressed thoughts are memories or thoughts that have been unconsciously avoided or forgotten, often because they are associated with negative emotions or trauma.

Biological Model

A perspective in psychiatry and psychology that attributes psychological disorders to biological factors, such as genetic inheritance, neurotransmitter levels, and brain structure anomalies.