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Answer: direct relationship with the time remaining until expiration.
The value of a European call option is directly influenced by the time to expiration. All else being equal, a longer time to expiration increases the option's value due to the greater potential for the underlying asset's price to move favorably. This contrasts with options A and B, which incorrectly suggest inverse relationships with the underlying asset's price and volatility, respectively. In reality, the value of a call option is directly related to both the price and volatility of the underlying asset.
Author: LeetQuiz Editorial Team
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All else held equal, the value of a European call option is most accurately described as having a:
A
inverse relationship with the price of the underlying asset.
B
inverse relationship with the volatility of the underlying asset.
C
direct relationship with the time remaining until expiration.
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