CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 68 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 68
Topic #: 6

[All CIMAPRO19-P03-1 Questions]

Which of the following will increase the value of a call option?

AAn increase in the strike price.

BAn increase in the time to expiry.

CA decrease in the volatility of the share.

DA decrease in the market value of the share.

Show Suggested Answer

Suggested Answer: B, E, F

by Yuette at May 17, 2024, 01:13 PM

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Chauncey

1 months ago

Okay, let's see here... An increase in the strike price, a decrease in the volatility, a decrease in the market value? Sounds like a recipe for the world's saddest call option. I'm going with B - an increase in the time to expiry. That way, at least the option has a chance to eventually make me a millionaire. Or bankrupt me, whatever.

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Truman

17 days ago

User 1: I think B is the best choice too.

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Barabara

1 months ago

Oof, options questions always make my head spin. But I've got this one figured out. The answer has to be B - an increase in the time to expiry. It's like a fine wine, the longer it has to age, the better it gets. Or something like that, I don't know, I'm just winging it here.

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Pamella

User 1: I think the answer is A) An increase in the strike price.

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Geoffrey

2 months ago

Oh, this is a tricky one! I was tempted to say C, but then I remembered that higher volatility means more potential for the share price to increase, which would increase the value of the call option. Yeah, B is the way to go, no doubt about it.

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Alba

8 days ago

User 3: Yeah, higher volatility means more potential for the share price to increase, so B is the right choice.

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Dominque

14 days ago

User 2: I agree, an increase in the time to expiry will definitely increase the value of a call option.

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Howard

21 days ago

User 1: I think B is the correct answer.

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Alline

2 months ago

Hmm, let me think about this... An increase in the strike price would actually decrease the value of a call option, so that's not it. And a decrease in the market value of the share? That's just crazy talk. I'm going with B - gotta be the time to expiry.

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Sheridan

26 days ago

User 4: That makes sense, time to expiry would definitely increase the value.

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Adelle

1 months ago

User 3: I agree, I'm going with B) An increase in the time to expiry.

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Daniela

1 months ago

User 3: I agree with Elouise, I think it's A) An increase in the strike price.

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Yoko

1 months ago

User 2: No, that would actually decrease the value of a call option.

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Elouise

1 months ago

User 2: Elouise, that would actually decrease the value of a call option.

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Lynna

1 months ago

User 1: I think it's A) An increase in the strike price.

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Youlanda

2 months ago

User 1: I think it's A) An increase in the strike price.

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Curt

2 months ago

Aha, this is a classic options question! I'm pretty sure the answer is B - an increase in the time to expiry. The longer the option has until it expires, the more time it has to increase in value. Easy peasy!

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