Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) An option's value is determined by its exercise value,which is the market price of the stock less its strike price.Thus,an option can't sell for more than its exercise value.
• B) As a stock's price increases,the premium portion of an option on that stock increases because the difference between the stock price and the fixed strike price increases.
• C) If the company is consistently profitable,its call options will always be in the money.
• D) The market value of an option depends in part on the option's length of time until expiration and on the variability of the underlying stock's price.
• E) The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin becomes larger.

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Definitions:

PhCOCl

Commonly referred to as benzoyl chloride, it's a compound consisting of a benzene ring attached to a carbonyl chloride group, used in organic synthesis.

Mechanistic Step

Refers to an individual stage or transition within the broader sequence of events that constitute a chemical reaction's mechanism.

Amine

An organic compound and functional group consisting of a basic nitrogen atom with a lone pair and deriving from ammonia by replacement of one or more hydrogen atoms by organic groups.

Carboxylic Acid

Organic compounds containing a carboxyl group (-COOH), known for their acidic properties.