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) Strike price.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

The value of an option (call or put) is determined by several factors, including the stock's price, the risk-free rate, the option's time to maturity, the strike price, and the variability of the stock price (measured by its volatility). Therefore, all of the above factors affect the value of an option.

Other Things Held Constant, the Value of an Option Depends