An Option's Value Will Never Be Less Than Zero Because

question 11

Multiple Choice

An option's value will never be less than zero because:

• A)The intrinsic value is always less than zero.
• B)The option seller is required to make up any shortfall faced by the option buyer.
• C)An option holder will never make an additional payment to exercise the option.
• D)The time value of the option is always less than zero.

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Definitions:

Sole Proprietorships

Sole proprietorships are businesses owned and operated by one person, where there is no legal distinction between the owner and the business entity.

Business Organization

A legal entity formed to carry out commercial or industrial enterprises by engaging in trading, manufacturing, or providing services.

Financial Manager

A professional responsible for managing the financial health of an organization by overseeing investment activities and planning for the long-term financial strategy.

Corporation

A legal entity that is separate and distinct from its owners, which can own assets, incur liabilities, and conduct business.