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Call option pricing

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Describe the effect on a call option's price caused by an increase in each of the following factors: stock price, strike price, time to expiration, risk-free rate and variance of stock return.

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The solution describes the effect on a call option's price caused by an increase in each of the given factors.

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An increase in the price of a stock will cause an increase in the price of a call option. This is because the call provides the right to buy a stock at a certain price. As the price increases, this right becomes more valuable, as it is more likely the holder of ...

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