Which of the Following Will Result from a Decrease in an Option's

question 77

Multiple Choice

Which of the following will result from a decrease in an option's strike price?
I. increase in call option price
II. decrease in call option price
III. increase in put option price
IV. decrease in put option price

• A)I only
• B)I and III only
• C)I and IV only
• D)II and III only
• E)II and IV only

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Definitions:

AC

Alternating current, a type of electrical current where the flow of electrons periodically reverses direction.

DC

Direct Current, characterized by the unidirectional flow of electric charge, typically used in batteries, solar cells, and as the output of rectifiers.

Armature

The rotating coil or coils of a dynamo or electric motor, which induce electromotive force by rotating in a magnetic field.

Magnetic Field Rotation

This term refers to the phenomenon seen in rotating machinery and devices like electric motors, where the magnetic field within these devices rotates, causing the rotor to spin.