Explanation:
The value of an American call option increases as the underlying asset price, volatility, and the risk-free rate increase. However, an increase in the strike (exercise) price decreases the payoff for a call option, causing its price to decrease.
Q.79 An increase in one of the following factors is likely to cause the price of an American call option to decrease. Which one?
A
Current stock price
B
Strike price
C
Volatility
D
Risk-free rate
No comments yet.