If the Bank of England announces that it will start to frequently intervene in order to reduce the fluctuations of British pound, the premiums on call and put options will increase.

Question

Quizplus · Accepted Answer

If the Bank of England announces that it will frequently intervene to reduce currency fluctuations, it will likely reduce the uncertainty and volatility in the market, leading to a decrease in premiums on call and put options. This is because the market perceives a reduced level of risk and uncertainty, making the options less valuable.

If the Bank of England Announces That It Will Start