If the Market Is in Equilibrium, Then an Option Must

question 18

True/False

If the market is in equilibrium, then an option must sell at a price that is exactly equal to the difference between the stock's current price and the option's strike price.

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Definitions:

Price Elasticity

The determination of how significantly a good's demanded quantity is influenced by its price movements.

Midpoint Method

A technique used in economics to calculate the percentage change between two numbers, offering a more accurate depiction of proportionate change.

Supply

The total amount of a product or service available for purchase at any given price level.

Quantity Supplied

The total amount of a product or service that producers are willing and able to sell at a given price in a specific time period.