The Buyer of a Call Option on Stock Benefits If

question 8

True/False

The buyer of a call option on stock benefits if the underlying stock price rises or if the volatility of the stock's price increases.

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Definitions:

Amortized

The process of gradually writing off the initial cost of an asset over a period, in accordance with its estimated useful life.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but not full control.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Acquisition Differential

The gap between the acquisition cost of a company and the fair value of its clearly identifiable net assets.