Which of the following events are likely to increase the market value of a call option on an ordinary share? Explain. a) An increase in the stock price. b) An increase in the volatility of the stock price. c) An increase in the risk-free rate d) A decrease in the time until the option expires
Which of the following events are likely to increase the market value of a call option on an ordinary share? Explain. a) An increase in the stock price. b) An increase in the volatility of the stock price. c) An increase in the risk-free rate d) A decrease in the time until the option expires
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter5: Financial Options
Section: Chapter Questions
Problem 6MC
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Question
Which of the following events are likely to increase the market value of a call option on
an ordinary share? Explain.
a) An increase in the stock price.
b) An increase in the volatility of the stock price.
c) An increase in the risk-free rate
d) A decrease in the time until the option expires
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