A Longer Time to Maturity Will Unambiguously Increase the Value

question 27

Multiple Choice

A longer time to maturity will unambiguously increase the value of a call option because __________.
I.the longer maturity time reduces the effect of a dividend on call price
II.with a longer time to maturity the present value of the exercise price falls
III.with a longer time to maturity the range of possible stock prices at expiration increases

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

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Definitions:

Bureaucratic Control

A system to manage an organization through a set of formal rules and procedures to ensure efficiency and effectiveness.

Organizational Interests

Encompass the aims, goals, or objectives that an organization seeks to achieve.

Clan Control

An approach to management and organizational control that relies on cultural norms, values, shared goals, and informal relationships rather than formal rules.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.