Question 1 (5 points) We understand standard deviation of returns as a measure of risk and rational investors would like

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Question 1 (5 points)
We understand standard deviation of returns as a measure of riskand rational investors would like to minimize risk. Notwithstandingthis, you may have read that as the standard deviation of returnsof the underlying asset increases the value of an option rises. Ifstandard deviation is a measure of risk and investors do notparticularly like it, why does it lead to an increase in anoption's value? (40-60 words)
Question 2 (5 points)
Assume that you have some shares of stock in ABC Inc. Why do wesay that if you also purchase a put option on the same stock, theprice paid to buy the put option is like paying an insurancepremium? (60-70 words)