Which of the following statements about the current value of a short European call option on Warwick plc stock, a non-dividend-paying stock, is/are true?
Which of the following statements about the current value of a short European call option on Warwick plc stock, a non-dividend-paying stock, is/are true?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: The Basic Tools Of Finance
Section: Chapter Questions
Problem 6PA
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Which of the following statements about the current value of a short European call option on Warwick plc stock, a non-dividend-paying stock, is/are true?
(a) The current value of a short European call option is less than or equal to zero.
(b) The current value of a short European call option decreases as the volatility of returns on Warwick plc stock increases, holding all else constant.
(c) The current value of a short European call option decreases as the price of Warwick plc stock increases, holding all else constant.
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