Which of the following is always negatively related to the price of an American call option on a stock? A. The interest rate B. The time to expiration C. The volatility D. The strike price
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- What is not a variable in Boundary Conditions? a) underlying stock price at expiration b) exercise price c) time to maturity d) underlying stock price at Time=0 e) interest rateWhich of the following is NOT always positively related to the price of a European call option on a stock? a) The time to expiration b) The volatility c) The risk-free rate d) The stock priceWhat effect does Standard Deviation of Stock returns have on call option price?
- Which of the following describes delta? O The ratio of the option price to the stock price None of these O The ratio of a change in the option price to the corresponding change in the stock price The ratio of a change in the stock price to the corresponding change in the option price O The ratio of the stock price to the option price ◄ Previous Next ▸What effect does Stock Price have on call option price? What effect does Time expiration have on call option price? What effect does Risk-free rate have on call option price? What effect does Standard Deviation of Stock returns have on call option price?In the Black-Scholes option pricing model, the value of a call is inversely related to: a. the risk-free interest stock b. the volatility of the stock c. its time to expiration date d. its stock price e. its strike price
- Describe the effect of a change in each of the following factors on the value of a calloption:1. Stock price2. Exercise price3. Option life4. Risk-free rateWhat impact does each of the followingparameters have on the value of a call option?(5) Variability of the stock pricea. Explain how and why an increase in each of the following affects the prices of both call and putoptions, holding all other variables constant: i. The current stock price ii. The strike price
- Which of the following events are likely to increase the market value of a calloption on a common stock? Explain.a. An increase in the stock’s priceb. An increase in the volatility of the stock pricec. An increase in the risk-free rated. A decrease in the time until the option expires28. What is the relationship between option prices and time to expiration, volatility of the underlying stocks, and the exercise price?Which of the following statements true? A call option price is increasing in stock return volatility A put option price is decreasing in stock return volatility I. II. A) I. and II. are true B) I. is true and II. is false C) II. is true and I. is false D) I. and II. are false |