Which of the Following Statements Are Correct Concerning Option Values

question 18

Multiple Choice

Which of the following statements are correct concerning option values? I.The value of a call increases as the price of the underlying share increases.
II) The value of a call decreases as the exercise price increases.
III) The value of a put increases as the price of the underlying share increases.
IV) The value of a put decreases as the exercise price increases.

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

---

Definitions:

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.

Condition

A broad term that can refer to the state of something, especially in terms of its appearance, quality, or working order; in psychology, it relates to the state of learning or being under specific conditions.

Galvanic Skin Response

A physiological reaction where the conductivity of the skin changes in response to stress or emotional arousal.

Excitation Gradient

A concept in psycho-physiology referring to the increase in neuronal activity leading up to the initiation of a response.