Which of the Following Will Decrease the Value of a Call

question 97

Multiple Choice

Which of the following will decrease the value of a call option?
I.a decrease in the exercise price
II.a decrease in the value of the underlying security
III.an increase in the risk-free rate
IV.an increase in the time to expiration

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

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Definitions:

Minimum Bid

The lowest price that a seller is willing to accept for an item being sold at auction.

Net Working Capital

The variance between an organization's immediate assets and its short-term obligations, reflecting its short-term fiscal well-being.

Straight-Line Depreciation

A method of evenly distributing the cost of a tangible asset over its useful life, resulting in a fixed annual depreciation expense.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular project or investment.