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Question:
The time value of a put option on an asset that provides no cash flows would most likely be increased by:
A
an increase in the asset’s price volatility.
explanation
An increase in volatility will increase the value of a put option but will not change its intrinsic value, so it is the time value that increases. Changes in the exercise price or the value of the underlying asset will change an option's intrinsic or exercise value.
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