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Assume the Standard Deviation of the Returns on ABC Stock

question 5

Multiple Choice

Assume the standard deviation of the returns on ABC stock increases. This change will ________ the value of the call options and ________ the value of the put options on ABC stock.


Definitions:

Marginal Cost

The extra cost triggered by the production of an additional unit of a product or service.

Marginal Revenue

The additional income from selling one more unit of a good or service.

Marginal Cost

The hike in overall costs when one extra unit of a product or service is produced.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing surplus remaining after all costs have been paid.

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