Auctions in Recent Years Have Resulted in Higher Prices Paid

question 24

Multiple Choice

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.What is a reason for this difference in price?

• A)There is a surplus of letters written by Booth and a shortage of letters written by Lincoln.
• B)Many people are more fascinated by villains and anti-heroes than by heroic figures.
• C)There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth.
• D)Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them.

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Definitions:

Exercise Price

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

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, often represented by the yield on government securities such as U.S. Treasury bills.

Face Value

This is the nominal or dollar value printed on a financial instrument, such as a bond or stock certificate, representing its value at issue.