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:

Insomnia

A sleep disorder characterized by difficulty falling asleep, staying asleep, or experiencing non-restorative sleep.

Difficulty Falling Asleep

A common sleep problem where individuals struggle to transition from wakefulness to sleep, also known as insomnia.

Cessation of Breathing

The complete stoppage of all breathing activities, often a critical health emergency.

REM Sleep

A phase of sleep characterized by rapid eye movement, during which most dreaming occurs, and is considered important for cognitive functions like learning and memory.