Which of the Following Statements Is Most Correct, Holding Other

question 21

Multiple Choice

Which of the following statements is most correct, holding other things constant, for XYZ Corporation's traded call options?

• A) The higher the strike price on XYZ's options, the higher the option's price will be.
• B) Assuming the same strike price, an XYZ call option that expires in one month will sell at a higher price than one that expires in three months.
• C) If XYZ's stock price stabilizes (becomes less volatile), then the price of its options will increase.
• D) If XYZ pays a dividend, then its option holders will not receive a cash payment, but the strike price of the option will be reduced by the amount of the dividend.
• E) The price of these call options is likely to rise if XYZ's stock price rises.

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Definitions:

Traditional Institutions

Established societal structures and organizations that uphold conventional practices and norms.

1920s

A decade characterized by economic prosperity and cultural flourishing in the United States, often referred to as the "Roaring Twenties."

AFL

The American Federation of Labor, a national federation of labor unions in the United States.

Knights of Labor

The Knights of Labor was a significant labor organization in the United States during the late 19th century, advocating for the rights of workers and seeking to improve their conditions.