When the time to maturity increases with all else remaining the same,which of the following is true?
A) European options always increase in value
B) The value of European options either stays the same or increases
C) There is no effect on European option values
D) European options are liable to increase or decrease in value

Question

Quizplus · Accepted Answer

When the time to maturity increases from X to Y,European options usually increase in value.But this is not always the case.For example,European call options can decrease in value if a big dividend is expected between X and Y.

When the Time to Maturity Increases with All Else Remaining