The value of any option (both call and put options)is positively related to the
I.volatility of the underlying stock price;
II.time to expiration;
III.risk-free rate;
A)I and II only
B)II and III only
C)I and III only
D)III only

Question

Quizplus · Accepted Answer

The value of any option is positively related to the volatility of the underlying stock price and the time to expiration. This is because higher volatility and longer time to expiration increase the likelihood that the stock price will move in a favorable direction, making the option more valuable. The risk-free rate is not directly related to the value of the option, so choice III is incorrect.

The Value of Any Option (Both Call and Put Options)is