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sdas [7]
4 years ago
11

The value of a listed call option on a stock is lower when: I. The exercise price is higher. II. The contract approaches maturit

y. III. The stock decreases in value. IV. A stock split occurs.
Business
1 answer:
finlep [7]4 years ago
8 0

Answer: a. I, II, and III only

Explanation:

The exercise price refers to the amount that the person who buys the call option will get to buy the underlying stock at. If this price is high, the profit from buying the stock at maturity will be less so the value of the listed call option reduces.

As the contract approaches maturity, the value will decrease because it will be less volatile as it approaches maturity.

The purpose of buying a call option is so that a profit can be made if the underlying stock increases in value. If the stock decreases in value, the allure of the call option decreases so therefore will the value.

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