For European Options,what Is the Effect of an Increase in the Strike

question 29

Multiple Choice

For European options,what is the effect of an increase in the strike price E?

• A)Decrease the value of calls and puts ceteris paribus
• B)Increase the value of calls and puts ceteris paribus
• C)Decrease the value of calls,increase the value of puts ceteris paribus
• D)Increase the value of calls,decrease the value of puts ceteris paribus

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Definitions:

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increased demand for the other.

Natural Gas

A fossil fuel used as a source of energy for heating, cooking, and electricity generation, consisting mainly of methane.

Coal

A combustible black or brownish-black sedimentary rock, composed mostly of carbon and hydrocarbons, used as a fossil fuel.

Demand Curve

A graph that illustrates the relationship between the price of a good or service and the amount of it that consumers are willing and able to purchase at various prices, typically downward sloping.