When the price of underlying asset increases then the good option is __________?
Correct answer: A. buy the call option
- A. buy the call option
- B. sell the call option
- C. buy the put option
- D. sell the put option
Explanation
A call option benefits from an increase in the underlying asset because it allows purchase at the fixed strike price while the market price rises. A put option generally becomes more valuable when the underlying price falls.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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