In the Black-Scholes option pricing model, there are six factors that affect the value of call options
Question:
(1) The current price of the underlying stock,
(2) The time to maturity for the option contract,
(3) The dividend on the stock. Identify the remaining three factors, and explain how they affect the value of call options.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Related Book For 
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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