Consider the Following Equation: B_option = B_S

question 22

Multiple Choice

Consider the following equation: b_option = b_S + b_B
The term b_B is:

• A) always equal to zero since b_B = 0.
• B) always positive since B is always positive.
• C) could be positive or negative depending on whether the option in question is a put or a call.
• D) always negative since B is always negative.

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Definitions:

Income

Refers to the income earned, either periodically or consistently, from employment or investment ventures.

Utility Function

A mathematical expression that ranks preferences over a set of goods or outcomes, representing satisfaction or happiness derived from consumption.

Consumption

The act of using goods and services to satisfy needs and wants, which is a fundamental component of economics.

Income

The money received by an individual or business for services provided, products sold, or investments.