If the Price of Corn Increases

question 42

Multiple Choice

If the price of corn increases:

• A) there is a change in the supply of corn
• B) there is a change in the demand for corn
• C) there is a shift in the supply curve of corn
• D) none of the other answers

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Definitions:

Time Value

The portion of an option's price that exceeds its intrinsic value, representing the potential for additional value based on time remaining until expiration.

Out-of-the-money

A term used in options trading to describe an option that would not profit if exercised immediately, i.e., a call option with a strike price above the underlying asset's price or a put option below it.

In-the-money

An option is in-the-money when it has intrinsic value, meaning for a call option, the market price is above the strike price, and for a put option, below the strike price.

Black-Scholes Model

A mathematical model used for pricing European-style options and assessing the options' market value based on factors such as volatility, risk-free rate, and time to expiration.