An increase in which of the following would increase the price of a call option on common stock,ceteris paribus?
I. Stock price
II. Stock price volatility
III. Interest rates
IV. Exercise price
A)II only
B)II and IV only
C)I,II,and III only
D)I,III,and IV only
E)I,II,III,and IV

Question

Quizplus · Accepted Answer

I, II, and III are correct because an increase in the stock price, stock price volatility, and interest rates all increase the value of a call option. An increase in the exercise price would decrease the value of a call option, not increase it.

An Increase in Which of the Following Would Increase the Price