CIMA F3 Question Answer
The value of a call option will increase because of:
An increase in the strike price.
A decrease in the volatility of the share.
An increase in the time to expiry.
A decrease in the market value of the share
The value of a call option increases when:
The underlying share price increases
The strike price decreases
The time to expiry increases
Volatility increases
Risk-free rate increases
Looking at the options:
A. Increase in strike price → reduces call value
B. Decrease in volatility → reduces call value
C. Increase in time to expiry → increases call value ✅
D. Decrease in share price → reduces call value
Answer: C. An increase in the time to expiry.
TESTED 13 Feb 2026
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