In the Black-Scholes Option Pricing Model, an Increase in Security

question 107

Multiple Choice

In the Black-Scholes option pricing model, an increase in security price (S) will cause

• A) an increase in call value and an increase in put value.
• B) an increase in call value and a decrease in put value.
• C) a decrease in call value and an increase in put value.
• D) a decrease in call value and a decrease in put value.
• E) an increase in call value and an increase or decrease in put value.

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Definitions:

Capital Contributions

Investments made by owners or partners in a business, typically in the form of cash, property, or other assets, to provide funding for the business.

Management

The process of dealing with or controlling things or people within an organization.

Profit

The financial gain that is made when the revenue from business activities exceeds its costs.

Limited Partnership

is a form of partnership characterized by having one or more general partners with unlimited liability, and one or more limited partners whose liability is limited to the amount of their investment.