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.

Question

Quizplus · Accepted Answer

An American call option on a non-dividend-paying stock is never exercised early because holding the option provides the same upside as exercising it, without the downside of losing the time value of the option.

An American Call Option on a Stock That Pays No