The Value of a Call Option Is Positively Related to the Following

question 72

Multiple Choice

The value of a call option is positively related to the following:
I.underlying stock price;
II.risk-free rate;
III.time to expiration;
IV.volatility of the underlying stock price

• A)I only
• B)II only
• C)III only
• D)I, II, III, and IV

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Definitions:

Treasury Stock

Shares that were once outstanding but were bought back by the company and are held in its treasury.

Repurchase Price

Repurchase price is the amount of money a company agrees to pay to buy back its own shares or bonds from investors, often determined at the time of the repurchase agreement.

Total Assets

The sum of all assets, both current and non-current, that a company owns.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the issuing company, reducing the amount of outstanding stock on the open market.