Which of the Following Statements Is FALSE

question 30

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 is of more worth 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 investor holding a short position in an option has an obligation; he or she takes the opposite side of the contract to the investor who holds the long position.

---

Definitions:

Correlation Coefficient

A statistical measure that indicates the extent to which two variables change together, but does not automatically imply causation.

Efficiency

The ability to accomplish a task or objective with minimal waste of time, energy, or resources.

Satisfaction

A feeling of fulfillment or contentment with one's achievements, status, or situation.

Naturalistic Observation

A research method involving the systematic observation and recording of behavior in its natural context without intervention.