Which of the following features increase(s)the value of a call option?
I.A high interest rate;
II.A long time to maturity;
III.A higher volatility of the underlying stock price
A)I only
B)II only
C)III only
D)I, II, and III

Question

Quizplus · Accepted Answer

All three features increase the value of a call option. A high interest rate increases the present value of the expected payoff, a long time to maturity gives the stock more time to increase in value, and higher volatility increases the potential for the stock to reach a higher price, all of which are beneficial for a call option holder.

Which of the Following Features Increase(s)the Value of a Call