Which of the following is true, select the most appropriate answer below. An American call option...

Which of the following is true, select the most appropriate answer below.

		An American call option on a stock should never be exercised early
		An American call option on a stock should never be exercised early when no dividends are expected
		There is always some chance that an American call option on a stock will be exercised early
		There is always some chance that an American call option on a stock will be exercised early when no dividends are expected

Expert Solution

B) An American call option on a stock should never be exercised early when no dividends

Are expected.

Reasons : 1) It is best to delay paying the strike price by exercising it as late as possible

2) Insurance provided by the option ( that the stock price will fall below the

Strike price) is lost

jeff jeffy answered 2 years ago

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