All else being equal, the rise in implied volatility increases the price of an option. This is true for both call and put option.
Implied volatility is directly related to the price of the option (both call and put), all else being equal.
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All else being equal, what impact would a rise in implied volatility have on the price...
3.5 In the Black-Scholes option pricing model, value of an option decreases, all else equal, as it nears expiration. (True / False) 3.6 The Black-Scholes option pricing model assumes which of the following? a. Jumps in the underlying price b. Constant volatility of the underlying c. Possibility of negative underlying price d. Interest rate increasing as option nears expiration 3.7 Which Greek shows how sensitive option delta is to the price of the underlying asset? a. Vega b. Gamma c....
Implied volatility has what kind of relationship to the value of a stock option price? Negative Uncorrelated Depends on if you are buying a put or call Positive
all else being equal, a company with a high operating leverage will have All else being equal, a company with a high operating leverage will have relatively low risk. relatively high contribution margin ratio. relatively high variable costs. relatively low fixed costs.
All else equal, the unemployment rate will definitely rise if there is an increase in the population. there is an economic expansion. the labor force increases. previously discouraged workers start looking for work again.
Implied yield volatility for at-the-money Dec 20 Eurodollar options currently equals 40%. These options expire in 300 days (12/14/20) and the current December futures price suggests that the market expects 3-month LIBOR to equal 1.40% on that date. Based on current implied volatility, (approximately) what is the likelihood that 3-month LIBOR will be above 1.90% on 12/14/20?
suppose that the tariff on foreign-produced automobiles was increased. all else equal this would result in which of the following statements begin correct? 1.the demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 2.the amount of unemployed workers in the domestic automobiles industry would rise 3. foreign countries would send fewer automobiles to the domestic country. the reduction in the supply of foreign automobiles to the domestic country would result in a higher...
IBM stock currently sells for 100 dollars per share. The implied volatility equals 20.0. The risk-free rate of interest is 4.0 percent continuously compounded. What is the value of a call option with strike price 95 and maturity 6 months? Answer should be to the nearest cent (2 decimal places).
A firm with greater operating leverage would have a higher WACC. (all else equal). True or False?
What does the shape of the volatility smile reveal about call options on a currency? A. Options close-to-the-money have the lowest implied volatility B. Options deep-in-the-money have a relatively high implied volatility C. Options deep-out-of-the-money have a relatively high implied volatility D. All of the above
the higher the interest rate is the higher the duration, all else being equal t/f?