Enter a T or F. Explain your choice.

Portfolio A is long 100 European call options on a stock whose strike price is equal to the current stock price. Portfolio B is the replicating portfolio for portfolio A and contains 50 shares of stock and a position in the risk-free asset.

1. If the stock price increases, the value of portfolio A decreases

2. If the stock price increases, portfolio B will need to sell some stock in order to maintain its status as the replicating portfolio for portfolio A.