Final answer:
The correct answer is option c. The relationship between stock prices and option prices is best described by convexity, which indicates that as the value of the stock increases, option prices change at an increasing rate.
Step-by-step explanation:
When examining the graphical relationship between stock prices and option prices, the correct descriptor is convexity. This means that the relationship is not linear (flat or straight line), it is not hyperbolic (sharply increasing or decreasing in a particular direction), and it is not exponential (increasing or decreasing at an accelerating rate). Instead, option prices follow a convex curve relative to stock prices. This convex relationship suggests that as stock prices increase, the change in option prices gains momentum. It's similar to the concept of acceleration in physics, where the speed is not just increasing; it's picking up the pace as it increases. Convexity captures the idea that the rate of change of option prices itself changes as the stock price moves.