Which of the Following Events Is Likely to Decrease the Value

question 34

Multiple Choice

Which of the following events is likely to decrease the value of call options on the common stock of GCC Company?

• A) An increase in GCC's stock price.
• B) An increase in the exercise price of the option.
• C) An increase in the amount of time until the option expires.
• D) An increase in the risk-free rate.
• E) GCC's stock price becomes more risky (higher variance).

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Definitions:

Confidence Interval

A range of values that is used to estimate the true value of a population parameter with a certain level of confidence.

Independent Random Samples

Samples selected from a population in such a way that each individual sample is chosen randomly and independently from one another.

Confidence Interval

A span of numerical data obtained from sampling statistics that is expected to enclose an uncertain population parameter within a given confidence level.

Mean Calories

The average amount of energy contained in a food item or diet, typically measured in calories.