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:

High Temperatures

denotes periods or conditions of elevated temperature in the environment, which may have various effects on ecosystems, human health, and climate.

Tall Buildings

Structures that are significantly higher than average buildings, often designed for residential, commercial, or office use.

Mountains

Large natural elevations of the Earth's surface rising abruptly from the surrounding level, often characterized by their high altitude and scenic landscapes.

Mesosphere

The third layer of Earth's atmosphere, located above the stratosphere and below the thermosphere, characterized by decreasing temperatures with altitude.