An increase in the exercise price,all other things held constant,will ________ the premium on call options.
A) increase
B) decrease
C) not affect
D) Not enough information is given.

Question

Quizplus · Accepted Answer

When exercise price increases, the option becomes less valuable to the buyer as there is less likelihood of the option being in the money at expiration. Hence, the premium on call options decreases.

An Increase in the Exercise Price,all Other Things Held Constant,will