An Increase in Which of the Following Will Increase the Value

question 51

Multiple Choice

An increase in which of the following will increase the value of a call?
I.time to expiration
II.underlying stock price
III.risk-free rate of return
IV.price volatility of the underlying stock

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

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Definitions:

Congress

The national legislative body of a country, particularly in the United States, it is composed of the House of Representatives and the Senate.

Welfare

A system of support provided by the government or private organizations to ensure the basic living standards of individuals or communities.

Algorithm

A step-by-step procedure or set of rules to be followed in calculations or other problem-solving operations.

Heuristic

A mental shortcut or rule of thumb that helps simplify decision making and problem-solving.