The Value of a Call Option Increases as the Time

question 4

Multiple Choice

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

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

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Definitions:

Economic Activity

Every activity related to creating, distributing, and using products and services within an economic system.

Adam Smith

An 18th-century Scottish economist and philosopher, widely considered the father of modern economics, best known for his works on the principles of free market and the "invisible hand" concept.

Own Interests

Actions or decisions driven by personal benefits or gains, often discussed in the context of economic behavior or political decision-making.

Public Interest

The well-being and general benefit of the community or society at large, often guiding government policy and legal decisions.