- CFA Exams
- CFA Exam: Level I 2021
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 8. Factors that Affect the Value of an Option
CFA Practice Question
The owner of a ______ option anticipates the underlying security to ______ in terms of value.
II. put; decrease
III. call; increase
IV. call; decrease
I. put; increase
II. put; decrease
III. call; increase
IV. call; decrease
Correct Answer: II and III
A put holder expects stock prices to decline while a call holder expects stock prices to rise.
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