The Value of a Call Increases When: I

question 10

Multiple Choice

The value of a call increases when: I.the time to expiration increases.
II) the share price increases.
III) the risk-free rate of return increases.
IV) the volatility of the price of the underlying share increases.

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

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Definitions:

Human Preference

The tendencies or inclinations humans have towards certain choices, behaviors, or objects over others, often influenced by a wide range of biological, psychological, and social factors.

Hedonism

The human preference for pleasure over pain.

Pleasure Over Pain

The principle that individuals naturally seek to experience pleasure and avoid pain, guiding much of human motivation and behavior.

Approach Motivation

The inclination or drive to move towards or pursue a desired object, goal, or outcome.