A One Dollar Decrease in a Call Option's Exercise Price

question 10

Multiple Choice

A one dollar decrease in a call option's exercise price would result in a(n) __________ in the call option's value of __________ one dollar.

• A)increase, more than
• B)decrease, more than
• C)decrease, less than
• D)increase, less than
• E)increase,exactly

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business or kept as a reserve.

Common Shares

Units of ownership in a company that grant shareholders rights to vote on company matters and receive dividends, representing equity in the corporation.

Gross Profit

The income a company retains after subtracting the expenses related to the production and sale of its goods, or the expenses incurred from providing its services.