When the Stock Price Is Very High Compared with the Exercise

question 54

True/False

When the stock price is very high compared with the exercise price,the value of the call option approximates the difference between the stock price and the present value of the exercise price.

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Definitions:

General Partner

A type of owner in a partnership who has unlimited liability and is actively involved in the management of the business.

Entrepreneur

An individual who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Entrepreneurs

Individuals who create, launch, and manage new businesses, often taking on considerable risk in the expectation of profit.

Bankruptcy

A legal process involving a person or business that is unable to repay outstanding debts, resulting in the distribution of assets to creditors.