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 tends to rise when the underlying stock price rises. This is because the call option gives the holder the right to buy the stock at a set price, and as the stock price increases, the option becomes more valuable. The other statements are not necessarily true or may depend on other factors. The price of an option may not necessarily increase with a higher strike price or expire sooner. The volatility of the stock may also affect the option's price, but it can increase or decrease depending on the market's perception of risk. Finally, if a dividend is paid, the option holder may receive a cash payment or have the strike price adjusted, depending on the terms of the option contract.

Which of the Following Statements Is Most Correct, Holding Other