Which of the Following Statements Is False

question 38

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 the 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:

Proportion

The fraction of a whole that represents a part of the total population or quantity.

Data Values

The individual pieces of information collected in a study or used in calculations, which can be numerical or categorical.

Histogram

A graphical representation of the distribution of numerical data, with bars showing the frequency of data in successive intervals.

Observation

An observation is a record or a piece of data collected during an experiment or survey, representing one instance or example of a variable of interest.