Which of the following statements is FALSE?
A)An American call on a non-dividend-paying stock has the same price as its European counterpart.
B)The price of any call option on a non-dividend-paying stock always exceeds its intrinsic value.
C)It is never optimal to exercise a call option on a dividend-paying stock early-you are always better off just selling the option.
D)If the present value of the dividend payment is large enough,the time value of a European call option can be negative,implying that its price could be less than its intrinsic value.

Question

Quizplus · Accepted Answer

This statement is false. There are cases where it can be optimal to exercise a call option on a dividend-paying stock early, particularly if the dividend payment is large enough to outweigh any potential gains from holding onto the option.

Which of the Following Statements Is FALSE