The value of a call option increases as the exercise price decreases.

Name: The value of a call option increases as the exercise price decreases.
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Question

Quizplus · Accepted Answer

The exercise price is the price at which the underlying asset can be bought. As the exercise price decreases, it becomes cheaper to buy the underlying asset, therefore increasing the value of the call option. This relationship between exercise price and value of a call option is known as an inverse relationship.

The Value of a Call Option Increases as the Exercise