For a bond put option,the ________ the exercise price,the greater the cost of the put,and for a bond call option,the ________ the exercise price,the higher the cost of the call option.

Question

Quizplus · Accepted Answer

For a bond put option, a higher exercise price means the option is more valuable, hence more costly, because it allows selling the bond at a higher price. For a bond call option, a lower exercise price makes the option more valuable, hence more costly, because it allows buying the bond at a lower price.

For a Bond Put Option,the ________ the Exercise Price,the Greater