The Premium on an Existing Call Option Should ____ When

question 47

Multiple Choice

The premium on an existing call option should ____ when there is an increase in the expected short-term volatility of the stock price.

• A) be negative
• B) decline
• C) increase
• D) be unaffected
• E) A and B

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Definitions:

Statement Of Retained Earnings

A financial document that outlines the changes in retained earnings for a company over a specific period, showing how much profit is reinvested in the business or distributed to shareholders.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial document that reports a company's revenues, expenses, and profits over a specific period.

Liabilities

Financial obligations or debts that an entity owes to others, which must be settled over time through the transfer of economic benefits.