Which of the Following Statements Is False

question 16

Multiple Choice

Which of the following statements is false?

• A) An American call on a non-dividend-paying stock has the same price as its European counterpart.
• B) The price of any call option on a non-dividend-paying stock always exceeds its intrinsic value.
• C) It is never optimal to exercise a call option on a dividend-paying stock early you are always better off just selling the option.
• D) If present value of the dividend payment is large enough, the time value of a European call option can be negative, implying that its price could be less than its intrinsic value.

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Definitions:

Preliminary Agreement

An initial agreement that outlines the basic terms and conditions under which a final deal will be conducted, often used in real estate transactions and business deals.

Essential Terms

Critical conditions or clauses within a contract that define the agreement's fundamental obligations.

Online Auction

A digital marketplace where items are sold to the highest bidder through a timed bidding process.

Effective Offer

A proposal that meets all legal requirements and is presented in a manner that a reasonable person would understand its terms, triggering a potential contract.