Which of the Following Statements Is False

question 19

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:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in sales volume, indicating the degree of fixed versus variable costs.

Percentage Change

A mathematical calculation that depicts the degree of change over time, usually expressed as a percentage.

Break-Even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and one has "broken even."

Monthly

Pertaining to or calculated for a period of one month.