Which of the Following Is True

question 20

Multiple Choice

Which of the following is true?

• A) An American call option on a stock should never be exercised early
• B) An American call option on a stock should never be exercised early when no dividends are expected
• C) There is always some chance that an American call option on a stock will be exercised early
• D) There is always some chance that an American call option on a stock will be exercised early when no dividends are expected

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Definitions:

Compounded Monthly

The process where interest earned is added to the principal sum each month, which then earns further interest.

Inheritance

Assets or property received from someone who has passed away, often as dictated by a will or the laws of intestacy.

Investment

Assigning funds with the goal of achieving returns or making a profit.

Compounded Annually

interest calculation method where the interest is added to the principal once a year.