All Else Equal, If an Option's Strike Price Increases, Then

question 69

Multiple Choice

All else equal, if an option's strike price increases, then the

• A)value of a put option increases and that of a call option decreases.
• B)value of a put option decreases and that of a call option increases.
• C)value of both a put option and a call option increase.
• D)value of both a put option and a call option decrease.

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Definitions:

Investment Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Recognize

In tax terminology, to report and include a transaction in taxable income for the period it was realized, regardless of whether or not payment was received.

Gain

An increase in the value of an investment or asset.

Donor's Adjusted Basis

The value used for tax purposes to determine the gain or loss when property is given as a gift, generally the cost basis of the donor at the time of the gift.