Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.
• B)Call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.
• C)Call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.
• D)Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.

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Definitions:

Social Darwinism

Application of Charles Darwin’s theory of natural selection to society; used the concept of the “survival of the fittest” to justify class distinctions and to explain poverty.

Industrial Corporation

A large company involved in the manufacturing or production of goods on a large scale, often employing many people and having significant economic influence.

Inequality

The unequal distribution of resources, wealth, opportunities, and rights among individuals or groups in a society.

Native Americans

The indigenous peoples of the United States, including both American Indian and Alaska Native groups.