Stocks That Have More Volatile Price Changes Have More Valuable

question 77

Multiple Choice

Stocks that have more volatile price changes have more valuable call options because call holders:

• A) capture upside potential without additional downside risk.
• B) realize that volatility decreases the present value of the exercise price.
• C) have too little variability in the exercise price.
• D) have transferred all risk to put holders.

---

Definitions:

Actor-Observer Effect

A psychological phenomenon where people tend to attribute their own actions to situational factors while attributing others' actions to their character.

Actor's Behaviour

Refers to the actions and conduct of an individual, especially in a given situation or context.

Attribution Theory

A social psychology theory that explains how individuals pinpoint the causes of their own and others' behavior, emphasizing the role of belief in understanding the social world.

Situational Attribution

The process of attributing a person's behavior to external causes rather than to internal characteristics.