Which of the following statements is CORRECT?   Group of answer choices   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.   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.   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.   Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.   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.

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter8: Financial Options And Applications In Corporate Finance
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Which of the following statements is CORRECT?
 
Group of answer choices
 
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.
 
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.
 
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.
 
Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.
 
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.
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