Which of the following is/are false? $\begin{array}{c}
\begin{array}{lll}
I. \text {The volatility of the underlying stock.}\
II. \text {The risk-free rate.}\
III. \text {The time to expiration.}\
IV \text {The strike price.}
\end{array}
\begin{array}{c}
\text{ Call}\
- \
- \
+ \
+ \

\end{array}
\begin{array}{c}
\text{ Put}\
- \
+ \
- \
- \

\end{array}
\end{array}$

A) II and III only
B) I, II, and II only
C) I and IV only
D) I, III, and IV only
E) I, II, III, and IV

Question

Which of the following is/are false? $\begin{array}{c}
\begin{array}{lll}
I. \text {The volatility of the underlying stock.}\
II. \text {The risk-free rate.}\
III. \text {The time to expiration.}\
IV \text {The strike price.}
\end{array}
\begin{array}{c}
\text{ Call}\
- \
- \
+ \
+ \

\end{array}
\begin{array}{c}
\text{ Put}\
- \
+ \
- \
- \

\end{array}
\end{array}$

A) II and III only
B) I, II, and II only
C) I and IV only
D) I, III, and IV only
E) I, II, III, and IV

Quizplus · Accepted Answer

The table incorrectly suggests that the volatility of the underlying stock, the risk-free rate, the time to expiration, and the strike price have different effects on the value of call and put options. In reality, all these factors affect both call and put options similarly: volatility and time to expiration generally increase the value of both calls and puts, the risk-free rate positively affects calls and negatively affects puts, and the strike price has a complex effect but does not differ in direction between calls and puts based on the factors alone.

Which of the Following Is/are False A) II and III Only B) I, II, and II

Which of the Following Is/are False A) II and III Only
B) I, II, and II