Consider Two European Call Options,with Maturities Three Months and Six

question 6

Multiple Choice

Consider two European call options,with maturities three months and six months on the same stock and same strike price.The stock pays dividends in two months time and every quarter thereafter.Which of the following statements is most accurate?

• A)The three-month option must be worth more than the six-month option.
• B)The three-month option must be worth less than the six-month option.
• C)The three-month option must be worth less than the six-month option if the dividend payments remain constant.
• D)The three-month option may be worth more than the six-month option.

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Definitions:

Cultural Differences

Variations in the practices, values, and goals shared by groups of people that are shaped by their history, geography, religion, and social structure.

Personal Space

The area immediately surrounding an individual, which they regard as psychologically theirs, often leading to discomfort or anxiety when invaded.

Conversational Distance

The physical space preferred between individuals during social interactions, which can vary culturally and individually.

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Cells that make up the brain, including neurons and glial cells, which support, nourish, and protect neurons.