The Dollar Change in the Value of a Stock Call

question 39

Multiple Choice

The dollar change in the value of a stock call option is always

• A)lower than the dollar change in the value of the stock.
• B)higher than the dollar change in the value of the stock.
• C)negatively correlated with the change in the value of the stock.
• D)higher than the dollar change in the value of the stock and negatively correlated with the change in the value of the stock.

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Definitions:

Outstanding Stock

The total shares of a corporation's stock that are currently owned by all its shareholders, including shares held by institutional investors but excluding shares owned by the corporation itself.

Cash

Cash involves money in the form of currency, which includes bank notes and coins, that is in hand or readily available in deposit accounts for immediate use.

Building

A structure established or built from materials to provide shelter or accommodate individuals, businesses, or activities.

Consolidation

The process of combining financial statements of parent and subsidiary companies into one comprehensive set of statements.