Home › CA Final › strategicfinancialmanagement › Derivatives Analysis and Valuation › A put option becomes more valuable when:
A put option becomes more valuable when:
AThe underlying's spot price falls
BThe underlying's spot price rises
CInterest rates rise sharply
DTime to expiry approaches zero
Answer & Solution
Correct answer: A. The underlying's spot price falls
1. Identify what the question asks: this concept maps to putoption (§6.6.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (A).
_Source: ICAI BoS CA Final Paper 2, Ch 9 "Derivatives Analysis and Valuation"_
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