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Which of the Following Statements Is Correct

Question 1

Multiple Choice

Which of the following statements is correct?


A) Call options generally sell at a price less than their exercise value.
B) If a stock becomes riskier (more volatile) , call options on the stock are likely to decline in value.
C) Call options generally sell at prices above their exercise value, but for an in-the-money option, the greater the exercise value in relation to the strike price, the lower the premium on the option is likely to be.
D) 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.

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