When the Stock Price Is Very High Compared to the Exercise

question 85

True/False

When the stock price is very high compared to the exercise price,the call option premium approximates the difference between the stock price and strike price.

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Definitions:

Sixth Amendment

The Sixth Amendment is a part of the U.S. Constitution that guarantees the rights of criminal defendants, including the right to a speedy and public trial, an impartial jury, to be informed of the nature and cause of the accusation, to be confronted with the witnesses against them, to obtain witnesses in their favor, and to have the assistance of counsel for their defense.

Eighth Amendment

A provision of the U.S. Constitution prohibiting the federal government from imposing excessive bail, excessive fines, or cruel and unusual punishment.

Cruel and Unusual Punishment

Punishment prohibited by the Eighth Amendment to the United States Constitution, including torture or other forms of punishment too severe for the crime committed.

Extortion

The criminal act of obtaining money, property, or services from an individual or institution through coercion.