Which of the following affect the value of a call option?
I.strike price
II.time to maturity
III.standard deviation of the returns on a risk-free asset
IV.risk-free rate
A)I and III only
B)II and IV only
C)I, II, and IV only
D)II, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

The strike price, time to maturity, and risk-free rate all affect the value of a call option. The standard deviation of returns on a risk-free asset does not affect the value of a call option. Therefore, the correct choice is C, which includes options I, II, and IV.

Which of the Following Affect the Value of a Call