Which of the Following Statements Regarding Options Is True

question 49

Multiple Choice

Which of the following statements regarding options is true?

• A) An American option's premium should not decline below its intrinsic value.
• B) If a call is in the money, its time value is zero.
• C) The speculative premium reflects the option's immediate value.
• D) If a call is out of the money, its time value is zero.

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Definitions:

Learning

A process that induces changes in knowledge, behaviors, or attitudes through experience, practice, or study.

Relatively Permanent

A term often used in psychology to describe changes or effects that endure over time, although not necessarily without the possibility of change.

Classical Conditioning

A conditioning method where the continuous association of two stimuli results in a response initially provoked by the second stimulus becoming evoked by the sole presentation of the first stimulus.

Ivan Pavlov

A Russian physiologist best known for his work in classical conditioning, demonstrating the learning process through the Pavlov's dogs experiment.