Which of the Following Statements Is False

question 2

Multiple Choice

Which of the following statements is false?

• A) For a call written on a stock with a positive beta, the beta of the call always exceeds the beta of the stock.
• B) The beta of a put option written on a negative beta stock is always negative.
• C) As the stock price changes, the beta of an option will change, with its magnitude falling as the option goes in-the-money.
• D) A put option is a hedge, so its price goes up when the stock price goes down.

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Definitions:

Pure Monopoly

A market structure where a single seller sells a unique product in the market and no close substitutes exist.

Cartel

Market in which some or all firms explicitly collude, coordinating prices and output levels to maximize joint profits.

Price Strategies

Techniques used by companies to price their products or services with a view to maximizing profits or market share.

Marginal Revenue Function

The rate at which total revenue changes with respect to the output quantity change.