The Value of a Listed Call Option on a Share

question 23

Multiple Choice

The value of a listed call option on a share is lower when ________.
I. the exercise price is higher
II. the contract approaches maturity
III. the share decreases in value
IV. a share split occurs

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

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Definitions:

Normal Good

A type of good for which demand increases when consumer income rises, and decreases when consumer income decreases.

Rental Price

The cost associated with renting a property, such as an apartment or a car.

Normal Good

A type of good for which demand increases as the income of individuals or the economy increases.

Income

Payments obtained regularly from employment or investment returns.