If a Stock Price Increases, the Price of a Put

question 38

Multiple Choice

If a stock price increases, the price of a put option on the stock will ________ and the price of a call option on the stock will ________.

• A) decrease; decrease
• B) decrease; increase
• C) increase; decrease
• D) increase; increase

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Definitions:

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action; essentially, the benefits you could have received by taking an alternative action.

Produced Goods

Produced goods are items that have been manufactured or processed from raw materials, ready for sale or distribution.

Services

Activities or benefits provided to consumers that do not result in the ownership of a tangible product.

Capital

Financial assets or the monetary value of assets, such as buildings and machinery, invested in a business to create more wealth.