Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.
• B)Call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.
• C)Call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.
• D)Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.

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Definitions:

Kilograms

A unit of mass in the metric system, widely used globally in science, industry, and medicine to measure body weight or substance amounts.

Conversion Formula

A mathematical equation used to change a measurement from one unit to another.