Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)The value of an option generally decreases with the volatility of the share.
• B)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.
• C)Because an American option cannot be worth less than its intrinsic value, it cannot have a negative time value.
• D)An American option with a later exercise date cannot be worth less than an otherwise identical American option with an earlier exercise date.

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Definitions:

Random Assignment

The process of allocating individuals randomly to groups in an experimental study to ensure that each group is similar at the start of the study, reducing bias and increasing the validity of the results.

Positive Correlation

A connection between two variables wherein a rise in one leads to a rise in the other.

Experimental Group

In an experiment, the group that is exposed to an independent variable.

Participant Effect

The influence on research outcomes resulting from participants' awareness they are being studied, potentially altering their behavior.