There are call options on the common stock of XYZ Corporation. Which of the following best describes the factors that affect call option values?
A. The price of call options will rise if XYZ's stock price rises.
B. The higher the strike price, the higher the call option price.
C. Assuming the same strike price, a call option that expires in 1 month will sell for a higher price than one that expires in 3 months.
D. The less volatile a stock's price, the more valuable a call option on the stock is.
E. If the risk-free rate of interest increases, the value of call options will decrease.
Answer: A
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