Bob and Joe both own convenience marts on opposite corners. Both firms are considering expanding the size of their stores. The payoff matrix for this decision is shown below. Does Bob's Mart have a dominant strategy? Explain.
Definitions:
Time Value
The additional amount an investor is willing to pay for an option above its intrinsic value, based on the time remaining until its expiration.
Put Option
A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified timeframe.
In-The-Money
A term used in options trading to describe an option that has intrinsic value, where the strike price is favorable compared to the current market price of the underlying asset.
Stock Price
The current price at which a share of a company is being bought or sold in the stock market.
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