An American Call Option on a Stock That Pays No

question 19

Multiple Choice

An American call option on a stock that pays no dividends:

• A) May be exercised early if the stock rises sharply just before maturity.
• B) Is always exercised early when the the call is deep in-the-money, and the volatility of the stock drops from its initial level.
• C) Is not exercised early unless the growth in the stock exceeds the rate of interest.
• D) Is never exercised early.

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