Which of the Following Statements Is Correct

question 10

Multiple Choice

Which of the following statements is correct?

• A) Call and put options increase in price if the exercise price is increased.
• B) Call and put options increase in price if the volatility of the underlying asset is decreased.
• C) Call and put options increase in price if the time to expiry is increased.
• D) Call and put options increase in price if the opportunity cost of funds is increased.

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Definitions:

Regression Equation

A mathematical formula that describes the relationship between two or more variables, typically identifying how one dependent variable changes as an independent variable(s) changes.

Y-intercept

The location on a graph where a line or curve intersects with the y-axis.

Multiple Correlation

A statistical technique that measures the strength of the relationship between a dependent variable and two or more independent variables.

Predictors

Variables in statistical models that are used to forecast or estimate another variable of interest.