Asked by IHECHILURU OGBONNA on May 09, 2024
Verified
The value of a call increases when the stock price increases.
Stock Price
The cost of purchasing a share of a company, as traded on a stock exchange, reflecting the market's view of its collective prospects.
Value
The importance, worth, or usefulness of something, often measured in terms of money or utility.
- Appreciate the connection between the value fluctuations of call options and the price changes of the stocks they are based on.
Verified Answer
SM
Shane MaloneyMay 14, 2024
Final Answer :
True
Explanation :
The value of a call option increases as the underlying stock price increases because the option gives the holder the right to buy the stock at a predetermined price, making the option more valuable if the stock price is higher.
Learning Objectives
- Appreciate the connection between the value fluctuations of call options and the price changes of the stocks they are based on.