According to the Black/Scholes Option Valuation Model, a Call Option's

question 19

Multiple Choice

According to the Black/Scholes option valuation model, a call option's value decreases if

• A)interest rates increase as the option approaches expiration
• B)the variability of the stock's return decline and the interest rate decreases
• C)an increase in the price of the stock results in a two for one stock split
• D)the option is exercised

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Definitions:

Symbols

Characters or graphical representations used to represent objects, quantities, or concepts in various fields including mathematics, physics, and more.

Ratio Level

The highest level of measurement that describes data with a natural zero point and equal intervals, allowing for the computation of ratios.

Absolute Zero

A point on a scale where there is a complete absence of the measured phenomenon, allowing for ratio comparisons.

Ordinal Level

A measurement scale that categorizes data while preserving the order of the categories but not assuming equal intervals between them.