Other Things Equal, the Price of a Stock Call Option

question 9

Multiple Choice

Other things equal, the price of a stock call option is negatively correlated with which of the following factors?

• A)The stock price
• B)The time to expiration
• C)The stock volatility
• D)The exercise price

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Definitions:

Fixed Costs

Expenses that remain constant regardless of business activity levels, including lease payments and insurance premiums.

Short Run

A period in which at least one factor of production is fixed and cannot be changed, limiting the firm's ability to adjust fully to market changes.

Monopolistically Competitive

A market structure characterized by many sellers offering differentiated products, allowing for some degree of market power.

Fixed Costs

Costs that do not vary with the level of output or production, such as rent, salaries, and equipment maintenance.