Which of the following statements is most correct, holding other things constant, for XYZ Corporation's traded call options?

Question

Quizplus · Accepted Answer

The price of call options will generally increase as the stock price increases. Option prices are closely tied to the underlying stock, and a rising stock price makes the option more valuable. All other choices are incorrect. A higher strike price will generally result in a lower option price, a longer expiration time typically leads to a higher option price, a stabilization of the stock price will not necessarily increase option prices, and dividend payments can affect option prices but not in the way described in choice D.

Which of the Following Statements Is Most Correct, Holding Other