The Value of a Call Option

question 393

Multiple Choice

The value of a call option:

• A) Decreases as the price of the underlying security increases.
• B) Has a greater reaction to a change in the time to maturity than does a put option.
• C) Increases as the risk-free rate of return decreases.
• D) Increases as the price fluctuation of the underlying security increases.
• E) Decreases as the time to expiration increases.

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Definitions:

Variability

The degree to which data points in a statistical distribution or data set diverge from the average or mean value.

Respondents

Individuals who answer or respond to surveys or questionnaires in a research study.

Household Income

The total income earned by all members of a household, including wages, investments, and any other sources of income.

Proportion

A part, share, or number considered in comparative relation to a whole; often expressed as a fraction or percentage.