As the Volatility of the Stock Price Increases, the Time

question 45

Multiple Choice

As the volatility of the stock price increases, the time value of the option:

• A)Decreases.
• B)Is zero.
• C)Increases.
• D)Doesn't change.

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Definitions:

Least-Cost Rule

A principle suggesting that the most efficient way to achieve a desired level of output is by minimizing the cost of input resources.

Unit Cost

The calculated cost to produce one unit of a product, taking into account all relevant production expenses.

Technological Advance

The progress in technological development that leads to more efficient processes, products, or services.

Productive Capital

Resources such as machinery, tools, and buildings used in production to generate wealth.