Use the Figure for the Question(s)below

question 29

Multiple Choice

Use the figure for the question(s) below.
-This graph depicts the payoffs of:

• A)a short position in a put option at expiration.
• B)a short position in a call option at expiration.
• C)a long position in a put option at expiration.
• D)a long position in a call option at expiration.

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Definitions:

Inelastic

Pertains to a scenario where the need for a product or service shows little reaction to fluctuations in its price.

Per Unit Price

The cost associated with a single unit of a product, illustrating the price at which one unit of the product can be purchased.

Elasticity Coefficient

A numerical measure of the responsiveness of the quantity demanded or supplied to a change in one of its determinants.

Linear Demand Curve

A graphical representation showing a straight-line relationship between the price of a good and the quantity demanded.