Which of the Following Is NOT True

question 19

Multiple Choice

Which of the following is NOT true

• A) When a CBOE call option on IBM is exercised, IBM issues more stock
• B) An American option can be exercised at any time during its life
• C) An call option will always be exercised at maturity if the underlying asset price is greater than the strike price
• D) A put option will always be exercised at maturity if the strike price is greater than the underlying asset price.

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Definitions:

Fama-French Three-factor Model

A model designed to describe stock returns through three factors: market risk, value vs. growth, and company size.

Default Spread

The additional yield that investors demand for holding a corporation's debt over a risk-free security, compensating for the risk of default.

Probability Distributions

Probability distributions describe how the probabilities of different possible outcomes are distributed for a specific random variable.

Anomalies Literature

Studies and reports focusing on irregularities or deviations in financial markets that contradict the efficient market hypothesis.