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

question 18

Multiple Choice

In the Black-Scholes option pricing model,an increase in security price (S) 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:

Section 14(e)

A provision under the U.S. Securities Exchange Act of 1934 that prohibits fraudulent, deceptive, and manipulative practices in connection with tender offers.

Securities Act of 1934

A U.S. federal law governing the secondary trading of securities (stocks, bonds, and debentures) to protect investors against malpractice.

Tender Offer

A public offer made by a person or company to purchase shares from shareholders, typically at a premium to market price, in an attempt to take control of the company.

Crowdfunding

The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.