I Hold a Long Position in a Call Option on IBM

question 13

Multiple Choice

I hold a long position in a call option on IBM stock. If the price of IBM goes down and its volatility goes up, then the value of my call option

• A) Increases.
• B) Decreases.
• C) Is unaffected.
• D) May increase, decrease, or stay the same.

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Definitions:

Quantity

The amount or number of a material or abstract thing not requiring a unit of measurement.

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The condition in which all inputs and outputs in an economy or a market are fully adjusted and there are no external pressures for change.

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Selling Price

Selling Price is the amount of money that a seller charges for a product or service.