[amp_mcq option1=”price hike in market” option2=”market stability” option3=”not volatile” option4=”highly volatile” correct=”option4″]<\/p>\n
The correct answer is D. highly volatile.<\/p>\n
A stock option is a contract that gives the buyer the right, but not the obligation, to buy or sell a stock at a specified price on or before a specified date. The price at which the option can be exercised is called the strike price. The date by which the option must be exercised is called the expiration date.<\/p>\n
The value of a stock option depends on a number of factors, including the price of the underlying stock, the strike price, the expiration date, and the volatility of the stock. Volatility is a measure of how much the price of a stock moves up and down. A stock that is highly volatile is one that has a lot of price movement.<\/p>\n
A stock option is more valuable when the stock is highly volatile because there is a greater chance that the price of the stock will move significantly in either direction. If the price of the stock moves up, the buyer of the call option can exercise the option and buy the stock at the strike price, which is lower than the current market price. If the price of the stock moves down, the buyer of the put option can exercise the option and sell the stock at the strike price, which is higher than the current market price.<\/p>\n
In contrast, a stock option is less valuable when the stock is not volatile because there is less chance that the price of the stock will move significantly. If the price of the stock does not move, the buyer of the option will not exercise the option and the option will expire worthless.<\/p>\n
Therefore, the correct answer is D. highly volatile.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”price hike in market” option2=”market stability” option3=”not volatile” option4=”highly volatile” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-51853","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n