When Does a Change in the Value of a Call

question 76

Multiple Choice

When does a change in the value of a call option come closest to matching the change in the price of the stock?

• A) When the stock is priced far above the exercise price.
• B) When the stock is priced far below the exercise price.
• C) When the stock is priced near zero.
• D) Changes in call value always come close to matching changes in stock price.

---

Definitions:

Preliminary Prospectus

An initial document provided by a securities issuer that describes the details of an upcoming offer to the public, often called a "red herring."

Ex-Rights

Ex-rights refer to a situation where a stock is traded without the benefit of a rights offering, which was previously announced to its shareholders.

Holder-Of-Record Date

The specific date set by a corporation on which the shareholders of record are entitled to receive a declared dividend or participate in corporate actions.

Private Debt

consists of loans and debt financing not traded on open markets, often issued to finance business operations or acquisitions, typically by private companies or individuals.