Which of the Following Statements Is Most Correct, Holding Other

question 23

Multiple Choice

Which of the following statements is most correct, holding other things constant, for XYZ Corporation's traded call options?

• A) the higher the strike price on xyz's options, the higher the option's price will be.
• B) assuming the same strike price, an xyz call option that expires in one month will sell at a higher price than one that expires in three months.
• C) if xyz's stock price stabilizes (becomes less volatile), then the price of its options will increase.
• D) if xyz pays a dividend, then its option holders will not receive a cash payment, but the strike price of the option will be reduced by the amount of the dividend.
• E) the price of these call options is likely to rise if xyz's stock price rises.

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Definitions:

Autonomic Arousal

The activation of the autonomic nervous system, which can manifest in physical responses such as increased heart rate or sweating, often as a reaction to stress or excitement.

Continually Tense

Experiencing steady and ongoing stress or tension without significant periods of relief or relaxation.

Apprehensive

Experiencing worry or dread about potential negative outcomes or events.

Social Anxiety Disorder

A chronic mental health condition characterized by an intense fear of social situations and being judged or negatively evaluated by others.