Which of the Following Are Always Positively Related to the Price

question 5

Multiple Choice

Which of the following are always positively related to the price of a European call option on a stock? choose three)

• A) The stock price
• B) The strike price
• C) The time to expiration
• D) The volatility
• E) The risk-free rate
• F) The magnitude of dividends anticipated during the life of the option

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Definitions:

Accounting Equation

The foundational principle in accounting that states assets equal liabilities plus shareholders' equity.

Profitable

Refers to a financial state where income exceeds expenses, resulting in a positive gain.

Accounting Equation

The foundation of double-entry bookkeeping, which asserts that assets equal the sum of liabilities and shareholders' equity.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities; it represents the ownership interest of the shareholders or owner in the company.