Asked by Henil Deepak Patel on May 04, 2024
Verified
The value of an American call option is increased when the exercise price is decreased.
American Call Option
A type of call option that can be exercised at any time before its expiration date, allowing the holder to buy the underlying asset at the specified strike price.
Exercise Price
The specified price at which the option holder can buy (call option) or sell (put option) the underlying asset or security when exercising their option.
Value Increase
The rise in the worth or market value of an asset or investment over time.
- Acquire insight into the variables that determine the worth of call options.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
True
Explanation :
Lowering the exercise price of an American call option makes it more likely to be in-the-money, increasing its value since the option gives the right to buy the underlying asset at a cheaper price compared to the market.
Learning Objectives
- Acquire insight into the variables that determine the worth of call options.