According to Put-Call Parity, Which of the Following Would Cause

question 20

Multiple Choice

According to put-call parity, which of the following would cause the value of a call option to decrease?

• A) a decrease in the present value of future dividends
• B) a decrease in the present value of the strike price
• C) an increase in the stock price
• D) a decrease in the price of the put price

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Definitions:

Unavoidable Cost

A cost that cannot be eliminated and must be incurred regardless of the action taken.

Relevant Cost

Costs that are directly tied to a specific managerial decision and will change as a result of that decision, critical for effective cost management and decision-making processes.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not factor into future decision making.

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed.