Which of the following variables does NOT affect the value of a stock option?
A) The predicted future price of the underlying stock
B) The current price of the underlying stock
C) The option's time to maturity
D) The option's strike price
E) The interest rate

Question

Quizplus · Accepted Answer

The value of a stock option is influenced by the current price of the underlying stock, the option's time to maturity, the option's strike price, and the interest rate, but not directly by predictions of the future price of the stock. Predictions may influence market behavior, but they do not directly factor into the mathematical models used for pricing options, such as the Black-Scholes model.

Which of the Following Variables Does NOT Affect the Value