In the Valuation of an Option Contract,the Following Statements Apply

question 36

Multiple Choice

In the valuation of an option contract,the following statements apply except

• A) The value of an option increases with its maturity.
• B) There is a negative relationship between the market interest rate and the value of a call option.
• C) The value of a call option is negatively related to its exercise price.
• D) The value of a call option is positively related to the volatility of the underlying asset.
• E) The value of a call option is positively related to the price of the underlying stock.

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Definitions:

Categorical Imperative

A central philosophical concept in the ethics of Immanuel Kant, referring to an absolute, universal moral law.

Means To An End

A method or action used solely to achieve a specific goal, without considering the process as valuable in itself.

Distributive Justice

The perceived fairness of how resources, rewards, and burdens are distributed within a society or group, contributing to social stability and equity.

Fairness

The quality of making judgments that are free from discrimination or favoritism, ensuring equal treatment for all.