Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the
A) Variability of the stock price.
B) Option's time to maturity.
C) All of the above.
D) None of the above.
E) Strike price.

Question

Quizplus · Accepted Answer

The value of an option is influenced by the stock price, the risk-free rate, the variability of the stock price (known as implied volatility), and the option's time to maturity. The strike price is also a factor, but it has a lesser effect on the option's value than the other factors. Therefore, all of the options mentioned in the question (A, B, and E) are correct.

Other Things Held Constant, the Value of an Option Depends