Which One of the Following Variables Influence the Value of Call

question 26

Multiple Choice

Which one of the following variables influence the value of call options
I. Level of interest rates
II. Time to expiration of the option
III. Dividend yield of underlying stock
IV. Stock price volatility

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

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Definitions:

Underlying Securities

Refers to the specific financial instruments (such as stocks, bonds, commodities, or currencies) that an option or other derivative contract is based upon.

Returns

The profit or loss generated from an investment, usually expressed as a percentage of the investment's initial cost.

Capital Structure

The composition of a company's funding through a mix of debt and equity securities.

Market Values

Describes the worth of an asset or company based on the current prices at which it can be sold in the market.