For European Options, What of the Effect of an Increase

question 57

Multiple Choice

For European options, what of 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

---

Definitions:

Probabilistic Generalization

A statement that applies in general terms to a percentage of cases, acknowledging that exceptions may exist.

Counterexamples

Instances or cases that contradict a rule or a generalization, often used to disprove arguments.

Coincidence

An occurrence of two or more events at the same time by chance.

Correlation

A statistical measure that represents the extent to which two or more variables fluctuate together.