n NISM Certifications
NSM General NISM
Medium

Assuming no other changes, what happens to the price of a put option when the underlying asset becomes more volatile?

Practice question from NISM Series IV - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. The price of a put option will increase

    Correct answer

  2. B

    The price of a put option will decrease

  3. C

    No change

  4. D

    Cannot be determined

Why this is the answer

Higher volatility increases option premiums.

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