Which of the Following Changes, Everything Else Held Constant, Will

question 83

Multiple Choice

Which of the following changes, everything else held constant, will increase the value of a call option?

• A) The value of the underlying asset becomes more volatile
• B) The price of the underlying asset goes down
• C) Getting closer to the expiration date (the passage of time)
• D) A higher strike price

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Definitions:

Return On Investment

measures the gain or loss generated on an investment relative to the amount of money invested.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific business segment, product, or department.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding income and expenses from non-operational activities.

Price Hike

An increase in the selling price of goods or services, which can be due to factors like higher production costs, supply shortages, or increased demand.