Which of the following factors affect the price of a stock option?

A) The risk-free rate
B) The riskiness of the stock
C) The time to expiration
D) The expected rate of return on the stock
E) The risk-free rate, riskiness of the stock, and time to expiration

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, serving as a baseline for assessing the risk and return on other investments.

Stock Option

A derivative financial instrument that gives the holder the right to buy or sell a stock at a specified price before a certain date.

Time to Expiration

Time to expiration refers to the duration until the expiry date of a derivative contract, such as options or futures, impacting its value and the strategies of investors holding or trading it.