Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A)The intrinsic value of an option is the value it would have if it expired immediately.
• B)A European option cannot be worth less than its American counterpart.
• C)Put options increase in value as the stock price falls.
• D)A put option cannot be worth more than its strike price.

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Definitions:

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuing company's shares, typically at the discretion of the bondholder.

Convertible Bonds

Financial instruments that can be converted into a specified number of common stock shares at the discretion of the bondholder, usually at certain times during their life.

Control

The power to influence or direct people's behavior or the course of events.

Warrants

Financial instruments allowing the holder to choose to purchase or sell an asset at a predetermined price prior to a specified deadline, without being required to do so.