In the Valuation of an Option Contract, the Following Statements

question 85

Multiple Choice

In the valuation of an option contract, the following statements apply EXCEPT:

• A) The value of an option increases with its maturity.
• B) There is a negative relationship between the market interest rate and the value of a call option.
• C) The value of a call option is negatively related to its exercise price.
• D) The value of a call option is positively related to the volatility of the underlying asset.
• E) The value of a call option is positively related to the price of the underlying stock.

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Definitions:

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