Which of the Following Statements Is False

question 24

Multiple Choice

Which of the following statements is false?

• A) Because an American option cannot be worth less than its intrinsic value, it cannot have a negative time value.
• B) An American option with a later exercise date cannot be worth less than an otherwise identical American option with an earlier exercise date.
• C) The value of an option generally decreases with the volatility of the stock.
• D) The intrinsic value is the amount by which the option is currently in-the-money or 0 if the option is out-of-the-money.

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Definitions:

Non-breaching Party

A party to a contract who has not failed to fulfill any of their contractual obligations.

UCC

Pertains to the Uniform Commercial Code, which is a detailed collection of regulations that oversee business dealings within the United States.

Implied Warranties

Unspoken, unwritten promises ensured by law that guarantee the goods sold meet certain criteria of quality and usability without expressly stating them.

Express Warranty

A written or verbal promise made by a seller to a buyer about the quality or nature of a product, offering assurance that certain facts or conditions are true.