Question
The table below shows the directional effects (up or down) of variables on call option prices (holding all other variables constant). Fill in the corresponding
The table below shows the directional effects (up or down) of variables on call option prices (holding all other variables constant). Fill in the corresponding effects for put option values, with a brief explanation.
| If This Variable Increases | Value of a Call Option | Value of a Put Option | Reason? |
| Stock price, S | Increases | ? | |
| Exercise price, X | Decreases | ? | |
| Volatility, s | Increases | ? | |
| Time to expiration, T | Increases | ? | |
| Interest rate, rf | Increases | ? | |
| Dividend payouts | Decreases | ? |
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Personal Finance
Authors: E Thomas Garman, Raymond Forgue
11th Edition
1111531013, 9781111531010
