Consider Two Identical European Call Options on Two Identical Stocks

question 18

Multiple Choice

Consider two identical European call options on two identical stocks A and B,except that the former stock pays dividends and the latter stock does not.Which of the following statements is most valid?

• A)Call A is greater in value than call B.
• B)The time value of call A is greater than that of call b.
• C)The time value of call B is greater than that of call A.
• D)The insurance value of call B is greater than that of call A.

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Definitions:

Biodiversity

The variety and variability of life on Earth, encompassing the diversity of species, their genes, and the ecosystems in which they live.

Tropical Rain Forests

Dense forests found in regions near the equator, known for their high biodiversity, consistent warm temperatures, and substantial rainfall.

Exotic Species

Organisms that are introduced into a region or ecosystem where they are not native, often causing harm.

Extinctions

The process through which species cease to exist or become extinct.