An American Call Option, with an Exercise Price of $5

question 444

True/False

An American call option, with an exercise price of $5, sells for $2; the stock price is $8 presents an arbitrage opportunity. (Assume no transaction costs and any option can be exercised immediately).

---

Definitions:

Young Children

Individuals in the early stages of childhood, typically considered to be between the ages of 2 and 6 years old.

Guidelines

Recommended practices or directions intended to guide actions or standards in a specific field or situation.

Nutritionists

Experts in food and nutrition who advise people on what to eat in order to lead a healthy lifestyle or achieve specific health-related goals.

Calories

Units of energy used to measure the amount of energy provided by food and beverages and the amount of energy expended by the body.