An Increase in Which of the Following Will Increase the Value

question 51

Multiple Choice

An increase in which of the following will increase the value of a call?
I.time to expiration
II.underlying stock price
III.risk-free rate of return
IV.price volatility of the underlying stock

• A)I and III only
• B)II, III, and IV only
• C)I, III, and IV only
• D)I, II, and III only
• E)I, II, III, and IV

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, before any purchases or sales have occurred.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Purchases

The total amount spent on goods and services for the purpose of resale or use in production within a given accounting period.

Ending Inventory

The final amount of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting the goods sold.