Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A)For a call written on a stock with positive beta,the beta of the call always exceeds the beta of the stock.
• B)The beta of a put option written on a negative beta stock is always negative.
• C)As the stock price changes,the beta of an option will change,with its magnitude falling as the option goes in-the-money.
• D)A put option is a hedge,so its price goes up when the stock price goes down.

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Definitions:

Natural Rate

The natural rate refers to the long-term unemployment rate that an economy experiences under normal conditions, unaffected by short-term cyclical fluctuations.

Full-Employment

A scenario where an economy utilizes all accessible labor resources in the most optimized manner.

Potential Output

Represents the highest level of real Gross Domestic Product (GDP) that can be sustained over the long term without increasing the rate of inflation.

Sustainable Output

The level of production that can be maintained over the long term without depleting natural resources or harming the environment.