- CFA Exams
- CFA Level I Exam
- 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
Which of the following would cause the price of a put option to increase?
II. An increase in the exercise price
III. An increase in the volatility of the underlying security
I. An increase in the price of the underlying security
II. An increase in the exercise price
III. An increase in the volatility of the underlying security
A. II and III
B. I and III
C. II only
User Contributed Comments 2
| User | Comment |
|---|---|
| monteleone | Can anyone provide an explanation for this? |
| dwadd | All you can lose is the premium. So if the stock become higly volatile, the chance of making more money goes up, but the risk stay the same. |