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 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:

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, commonly set thresholds include 0.05, 0.01.

Random Sample

A subset of individuals chosen from a larger set, where each individual has an equal chance of being selected.

Confidence Interval

A range of values derived from sample data that is likely to contain the value of an unknown population parameter, with a certain level of confidence.

Retained Students

Students who have not progressed to the next academic grade or level as expected, often due to academic or other challenges.