The following statement is not true
A. The higher the strike price the higher the premium for a put option.
B. The lower the strike price the lower the premium for a call option.
C. The lower the strike price, the lower the premium for a put option.
D. The higher the strike price the lower the premium for a call option
Ans: B. The lower the strike price the lower the premium for a call option.
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Assuming everyone wants to advance their interests in an effective way is an assumption of
A) capitalism. B) economic theory. C) government. D) selfishness.
The price of a gallon of milk falls. Which of the following is a possible cause?
A) a decrease in the price of oatmeal, a complement to milk B) a discovery that milk cause diabetes C) Milk is a normal good and people's incomes rise. D) a drought that reduces supplies of feed grains fed to cows that produce milk
Tying the salaries of top managers to the firm's stock price or to the profitability of the firm allows a firm's board of directors to
A) avoid disclosing financial statements to investors. B) eliminate moral hazard. C) increase asymmetric information. D) reduce the principal-agent problem.
Economists assume people's tastes are identical
Indicate whether the statement is true or false