Identify four factors that will cause the value of call options to increase.
What will be an ideal response?
Call options will increase in value if there is a decrease in the strike price; if there is an increase in the market price of the underlying asset, if there is an increase in the time to expiration, or if there is an increase in the volatility in the price of the underlying asset.
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A subsidy
a. used in an abatement equipment market can achieve an efficient solution if the subsidy is set equal to the MEB at QE b. on pollution reduction activity encourages firms to reduce pollution below a predetermined standard c. on abatement equipment can create bias by changing the relative prices of various abatement technologies d. all of the above e. (a) and (b) only
Given an MPC of 0.8, if there are no income taxes or imports and prices are constant, then when investment increases by 50 million and prices are fixed, equilibrium GDP would
a. increase $400 million. b. increase by $50 million. c. increase by $250 million. d. increases by $100 million.
Auction Information Austin's Auctions conducts online auctions on behalf of clients trying to dispose of liquidated dental laboratory equipment. Some clients want to keep product information about each of the items as guarded as possible so as to
negotiate from a stronger position. Others provide photos, detailed assessments as well as complete maintenance records. Which group of clients receive higher prices and why?
If the firm hires 5 workers, the average cost equals
a. $10 b. $1000 c. $80 d. Need more information