Which of the Following Statements Regarding Factors That Affect Call

question 8

Multiple Choice

Which of the following statements regarding factors that affect call option prices is CORRECT?

• A) The longer the call option has to run the smaller its value and the smaller its premium.
• B) An option on an extremely volatile stock is worth less than one on a stable stock.
• C) The price of a call option increases as the risk-free rate increases.
• D) Two call options on the same stock will have the same value even if they have different strike prices.
• E) If you observe a put option on a stock increase in value, a call option on the stock should also increase.

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Definitions:

Wundt

Wilhelm Wundt, often regarded as the father of experimental psychology, who established the first psychology laboratory in Leipzig, Germany, in 1879.

Nature-Nurture

A debate concerning the relative importance of an individual's innate qualities versus personal experiences in determining or causing differences in physical and behavioral traits.

Stability-Change

A debate within the field of psychology that concerns whether and how much personal characteristics and behavior change or remain stable throughout a person's life.

Person-Situation

Refers to the debate in psychology about the relative influence of personal traits versus situational factors on human behavior.