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All main topics / Finance & Investment / Derivatives / Derivatives
11.Which of the following describes a situation where an American put option on a stock becomes more likely to be exercised early?
A.Expected dividends increase
B.Interest rates decrease
C.The stock price volatility decreases
D.All of the above
Answer:  C

As the volatility of the option decreases the time value declines and the option becomes more likely to be exercised early. In the case of A and B, time value increases and the option is less likely to be exercised early.
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Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015




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