The Value of a Call Option Increases as the Time

question 30

Multiple Choice

The value of a call option increases as the time to expiration increases because:

• A) the exercise price continually decreases.
• B) the opportunity increases for the stock price to surpass the exercise price.
• C) the dividends accumulate while waiting to be paid.
• D)the option can be repeatedly exercised.

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Definitions:

Health Care

The maintenance and improvement of physical and mental health through medical services.

Income Security

Financial protection against uncertainties causing loss of income, including programs like pensions, unemployment insurance, and social security.

National Defense

Government or collective actions and strategies intended to protect a country and its citizens from external threats and maintain territorial integrity and sovereignty.

Opportunity Cost

The amount of other products that must be forgone or sacrificed to produce a unit of a product.