Which one of the following variables influences the value of call options?I) Level of interest ratesII) Time to expiration of the optionIII) Dividend yield of underlying stockIV) Stock price volatility
A) I and IV only
B) II and III only
C) I, II, and IV only
D) I, II, III, and IV
E) I, II, and III only

Question

Quizplus · Accepted Answer

All four variables influence the value of call options. The level of interest rates affects the cost of carrying positions, time to expiration impacts the potential for the stock to move, dividend yield influences the underlying stock's value, and stock price volatility affects the likelihood of the option ending in the money.

Which One of the Following Variables Influences the Value of Call