Consider Options That Are Identical in All Respects Except for the Differences

question 5

Multiple Choice

Consider options that are identical in all respects except for the differences that are mentioned.Then which of the following statements is INCORRECT?

• A) The difference in American call prices cannot exceed the difference in exercise prices.
• B) The price difference between two European puts cannot exceed the difference in exercise prices.
• C) The longer the time until expiration,the less valuable an American put is.
• D) Before expiration,an American put must be worth at least the exercise price less the stock price.
• E) Before expiration,a call option must be worth at least the stock price less the present value of the strike price.