Asked by aasiyyah ceasor on Jul 04, 2024
Verified
A decrease in the Variance of return of the underlying asset will increase the value of a put option.
Variance Of Return
A statistical measure of the dispersion of returns for a given security or market index, quantifying the volatility or risk associated with investing in it.
Put Option
A put option is a financial contract that gives the holder the right to sell an asset at a specified price within a specific time period.
- Master the aspects influencing option pricing and their significance.
Verified Answer
HT
Hello ThereJul 10, 2024
Final Answer :
False
Explanation :
A decrease in the variance (or volatility) of the underlying asset generally leads to a decrease in the value of a put option, as lower volatility means less chance of the option ending in the money (below the strike price).
Learning Objectives
- Master the aspects influencing option pricing and their significance.
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