Homework Clinic
Social Science Clinic => Economics => Microeconomics => Topic started by: fahad on Jun 30, 2018
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The period of time over which all inputs are variable is the
A) market horizon.
B) short run.
C) calendar year.
D) long run.
Question 2
How is the writer of an option affected by changes in its stock price?
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Answer to Question 1
D
Answer to Question 2
If the stock's price comes to exceed the strike price, the writer will have to give up her underlying or buy it on the market when the holder chooses to exercise the call. If the stock's price does not pass the strike price, she keeps the money she received from selling the option she wrote.