Which of the Following Statements Is Most Correct, Holding Other

question 21

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.

Perform information triage in evaluating conversations.

Understand the importance of social decentering in effective communication.

Differentiate between facts and inferences in communication.

Avoid generalizations in cross-cultural communication and practice cultural sensitivity.

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Definitions:

Capital Account Surplus

A situation where the inflows of foreign capital exceed the outflows, often reflecting in a nation's balance of payments.

Reserve Currency

A foreign currency held in large quantities by governments and institutions as part of their foreign exchange reserves.

Foreign Investment

Capital investment made by individuals or entities based in one country into businesses or assets in another country.

Current Account Balance

A measure of a country’s international trade in goods, services, and direct transfers, representing the difference between its exports and imports.