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As the variance of the asset price decreases, the value of a call option decreases because: Downside risk is virtually eliminated. It becomes more likely

As the variance of the asset price decreases, the value of a call option decreases because:

Downside risk is virtually eliminated.

It becomes more likely that the option will finish out of the money.

Downside risk doesn't change but the possible payoffs decrease.

Downside risk is virtually eliminated while the possible payoffs increase.

The possible payoffs increase.

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