Which One of the Following Statements Is True

question 97

Multiple Choice

Which one of the following statements is true?

• A)A call with a strike price of $25 and a stock price of $23 has positive intrinsic value.
• B)A European style option is more valuable than an American style option.
• C)An American style out-of-the-money call option can have a positive value.
• D)A $40 put option has more intrinsic value than a $50 put option on the same underlying asset.
• E)The time value of an option is equal to the intrinsic value minus the option premium.

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Definitions:

Operating Segments

Components of a business that engage in business activities from which they may earn revenues and incur expenses, including results that are reviewed by the company's management.

Segment Assets

Parts of a company's assets that are attributable to each of its business segments, useful for assessing segment performance and making investment decisions.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting its liquidity.

Profit (Loss)

The financial result of a company's operations, calculated as revenues minus expenses. A positive result indicates a profit, while a negative result indicates a loss.