All Other Things Held Constant,premiums on Call Options Will Increase

question 65

Multiple Choice

All other things held constant,premiums on call options will increase when the

• A) exercise price falls.
• B) volatility of the underlying asset falls.
• C) term to maturity decreases.
• D) futures price increases.

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Definitions:

Budgeted Operating Income

The anticipated revenue from operations minus the expected operating expenses for a certain period, typically before financial expenses and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, often used in variance analysis.

Variable Costs

Charges that adjust in line with the scale of production or sales figures.

Variable Overhead Efficiency Variances

The difference between the actual variable overhead incurred and the standard cost of variable overhead that should have been incurred based on efficient operations.