_________ is a factor which causes the speculative premium to increase.
A)Volatility of the underlying stock as measured by beta
B)Low dividend yield
C)A long exercise period
D)All of the above

Question

Quizplus · Accepted Answer

Generally, the higher the volatility of the common stock (as measured by the stock price's standard deviation or by its beta) and the lower the dividend yield, the greater the speculative premium. The longer the exercise period, the higher the speculative premium, especially if market expectations over the duration of the option are positive.

_________ Is a Factor Which Causes the Speculative Premium to Increase