The Buyer of a Call Option on Stock Benefits If

question 8

True/False

The buyer of a call option on stock benefits if the underlying stock price rises or if the volatility of the stock's price increases.

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Definitions:

Cost Per Unit

The total expense incurred to produce, store, and sell one unit of a product, including overhead costs.

Economic Profits

Profits earned by a firm or individual after considering both explicit financial costs and the implicit costs of alternatives forgone.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the amount of goods or services produced.

Demand Curve

A graph showing the relationship between the quantity of a good that consumers are willing and able to purchase and the price of the good.