Peak-Load Pricing Is the Practice of Charging a Lower Price

question 106

True/False

Peak-load pricing is the practice of charging a lower price for the same product or service when the demand for it approaches the physical limit of the capacity to produce that product or service.

---

Definitions:

Exercise Price

The predetermined price at which the holder of an option can buy or sell the underlying asset.

American Put Option

A financial contract that gives the holder the right to sell a specified amount of an underlying asset at a predetermined price before or at the expiration date.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Call Pays

Call pays refers to the financial transactions or payments made when the issuer exercises a call option on a bond, paying off the principal and any accrued interest before the maturity date.