In the Black-Scholes Option Pricing Model,an Increase in Exercise Price

question 75

Multiple Choice

In the Black-Scholes option pricing model,an increase in exercise price (X) will cause

• A) An increase in call value and an increase in put value
• B) An increase in call value and a decrease in put value
• C) A decrease in call value and an increase in put value
• D) A decrease in call value and a decrease in put value
• E) An increase in call value and an increase or decrease in put value

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials.

Materials Price Variance

The difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.

Standard Quantity

The expected or established quantity of materials or labor expected to be used during a manufacturing process or production cycle.

Standard Price

Standard price is the pre-determined cost that a company expects to pay for goods, materials, or services, used in budgeting and cost control.