Asked by Kesjan Kalemi on Jun 14, 2024
Verified
According to the Black-Scholes model, when the exercise price is increased, it results in a decrease in the value of a call option.
Exercise Price
In options trading, it is the price at which the holder can buy (call option) or sell (put option) the underlying security.
Black-Scholes Model
A mathematical model used to price European-style options, evaluating their worth based on stock volatility, risk-free rate, and other factors.
- Comprehend the essential tenets and variables essential to the Black-Scholes method of pricing options.
Verified Answer
RC
Ramón CastilloJun 20, 2024
Final Answer :
True
Explanation :
In the Black-Scholes model, the value of a call option is inversely related to the exercise price. As the exercise price increases, the likelihood of the option being in-the-money decreases, leading to a decrease in its value.
Learning Objectives
- Comprehend the essential tenets and variables essential to the Black-Scholes method of pricing options.