Derivatives are contracts enabling both buyers and sellers to execute a future transaction at a price determined at the outset of the derivatives contract. Please answer the following questions.

1. What is the difference between a call and put option?
2. What does the exercise - -or strike price denote?
3. Of the five inputs used on the Black-Scholes model, please list three of the most important inputs used in the model.
4. What happens to the call-option premium when the strike price begins to rise (Assuming that there are no changes to the other variables in the Black-Scholes model)?