There Are Call Options on the Common Stock of XYZ

question 13

Multiple Choice

There are call options on the common stock of XYZ Corporation.Which of the following best describes the factors that affect call option values?

• A) The price of call options will rise if XYZ's stock price rises.
• B) The higher the strike price,the higher the call option price.
• C) Assuming the same strike price,a call option that expires in 1 month will sell for a higher price than one that expires in 3 months.
• D) The less volatile a stock's price,the more valuable a call option on the stock is.
• E) If the risk-free rate of interest increases,the value of call options will decrease.

---

Definitions:

Physical Maturation

The process of physical growth and development, from infancy through adulthood, including the development of both primary and secondary sex characteristics.

Parents

Caregivers of offspring in their own species; in humans, typically comprised of a father and mother, who provide physical, emotional, and social support for their children.

Psychosocial Stages

A framework proposed by Erik Erikson that outlines eight stages of human development, each characterized by a specific challenge that individuals must resolve to develop a healthy personality.

Autonomy

The ability or capacity of a person to act independently and make decisions without external influence.