Which of the Following Statements Is Most Correct

question 14

Multiple Choice

Which of the following statements is most correct?

• A) If the underlying asset does not pay a dividend, it does not make sense to exercise a call option prior to its expiration date.
• B) Call options generally sell at a price less than their exercise value.
• C) If a stock becomes riskier (more volatile), call options on the stock are likely to decline in value.
• D) Answers b and c are correct.
• E) None of the answers above is correct.

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Definitions:

Seller's Place

Refers to the business location or premises from which a seller operates or conducts business transactions.

Good Faith

The honest intention to act without taking an unfair advantage over another party, often referenced in contracts and negotiations to ensure fair dealings.

Commercial Standards

Established practices or criteria within a business sector that are widely accepted and used to maintain quality and consistency.

Negotiable Warehouse Receipt

A document issued by warehouse keepers that promises delivery of goods stored in the warehouse to the holder of the receipt, which can be transferred by endorsement.