Which One of the Following Variables Influences the Value of Call

question 40

Multiple Choice

Which one of the following variables influences the value of call options?I) Level of interest ratesII) Time to expiration of the optionIII) Dividend yield of underlying stockIV) Stock price volatility

• A) I and IV only
• B) II and III only
• C) I, II, and IV only
• D) I, II, III, and IV
• E) I, II, and III only

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Definitions:

Investment Capital

Funds invested in a project, company, or any economic endeavor with the expectation of generating a future return.

Efficient Markets

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.

Profit Opportunities

Situations where individuals or firms can earn excess returns due to discrepancies in information, prices, or resources.

Economic Losses

Financial losses experienced by individuals, businesses, or economies as a result of factors such as poor investment decisions, natural disasters, or market downturns.