Other things equal,the price of a stock call option is positively correlated with the following factors
A)the stock price.
B)the time to expiration.
C)the stock volatility.
D)the exercise price.
E)A,B,and C.

Question

Quizplus · Accepted Answer

According to the Black-Scholes model, the price of a stock call option is positively related to the price of the underlying stock, the time to expiration and the volatility of the stock. Therefore, all three factors (A,B,C) will increase the price of a stock call option, while the exercise price (D) has a negative relationship with the price of a call option, as the option becomes less valuable as the exercise price increases. Hence, the best choice is E, i.e., A,B and C.

Other Things Equal,the Price of a Stock Call Option Is