If the Stock Price Decreases, the Price of a Put

question 15

Multiple Choice

If the stock price decreases, the price of a put option on that stock __________, and that of a call option __________.

• A) decreases; increases
• B) decreases; decreases
• C) increases; decreases
• D) increases; increases
• E) does not change; does not change

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Definitions:

Equitable Trust

A fiduciary relationship wherein one party, known as the trustee, holds assets for the benefit of another party, the beneficiary, according to equitable principles of fairness.

Implied-In-Fact

A contract formed by non-verbal conduct, rather than explicit words, indicating that both parties intend to be bounded.

An Accounting

The process or act of maintaining financial records, summarizing transactions, and analyzing financial data to understand the financial status of an individual or organization.

Specific Performance

A legal remedy requiring a party to fulfill the exact terms of a contract, typically used when monetary damages are insufficient.