For both American and European put options, which of the following reason will increase the put option's premium for sure? Higher volatility Lower exercise price Higher interest rate Longer expiration date

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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For both American and European put options, which of the following reason will increase the put option's premium for sure?
Higher volatility
Lower exercise price
Higher interest rate
Longer expiration date
Transcribed Image Text:For both American and European put options, which of the following reason will increase the put option's premium for sure? Higher volatility Lower exercise price Higher interest rate Longer expiration date
Which of the following statement is true?
For any type of derivatives, the payoffs will never be negative
For any type of derivatives, the profit will never be negative
There is no derivative that offers non-negative payoffs
There is no derivative that offers non-negative profit
All of the statements above are wrong
Transcribed Image Text:Which of the following statement is true? For any type of derivatives, the payoffs will never be negative For any type of derivatives, the profit will never be negative There is no derivative that offers non-negative payoffs There is no derivative that offers non-negative profit All of the statements above are wrong
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