According to the Black/Scholes Option Valuation

question 37

Multiple Choice

According to the Black/Scholes option valuation
Model, the value of a call option increases if

• A) the option approaches expiration
• B) the return on the stock is more certain
• C) interest rates on a discounted bond decline
• D) the standard deviation of the stock's return increases

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Definitions:

Net Income

The total earnings of a company after all expenses and taxes have been deducted from total revenue, indicating the company's profit.

Dividends

Dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Contingent Consideration

An obligation to transfer additional assets or equity interests to the former owners of an acquired business if future events occur or conditions are met.

Business Combinations

Transactions or events in which an acquirer obtains control over one or more businesses.