"Parallel Pricing" Refers to the Practice Whereby

question 56

Multiple Choice

"Parallel pricing" refers to the practice whereby:

• A) competing corporations conspire actively to fix prices
• B) corporations attempt to underprice all their competitors
• C) industry leaders set inflated prices and supposed competitors adjust their own prices accordingly
• D) corporations set prices parallel to the rate of inflation

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Definitions:

Black-Scholes Value

A model used to estimate the theoretical price of options and certain other financial instruments.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other assets at a specified price within a specific time period.

Volatility

The degree of variation of a trading price series over time, often used to gauge the risk in investments.

Put-call Parity

A principle in options pricing that shows the relationship between European put and call options with the same strike price and expiration date.