Which of the Following Statements Is CORRECT

question 16

Multiple Choice

Which of the following statements is CORRECT?

• A) call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.
• B) call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.
• C) call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.
• D) because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.
• E) if the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.

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Definitions:

Body Dysmorphic Disorder

A mental health disorder characterized by obsessive focus on a perceived flaw in appearance, often leading to significant distress or functional impairments.

Narcissistic Personality Disorder

A mental condition in which a person has an inflated sense of their own importance, a deep need for excessive attention and admiration, coupled with a lack of empathy for others.

Separation Anxiety Disorder

A mental health disorder characterized by an individual feeling overly anxious about being away from their home or from persons with whom they share a deep bond.

Attention-Deficit/Hyperactivity Disorder

A neurodevelopmental disorder characterized by inattention, hyperactivity, and impulsiveness.