Multiple Choice
A stock that pays no dividends has a price of $40.If the interest rate is zero,then which if the following statements is valid?
A) The three-month call is worth less than the two-month call.
B) The time value of the three-month call is the same as that of the two-month call.
C) The insurance value of the three-month call is the same as that of the two-month call.
D) The intrinsic value of the three-month call is less than that of the two-month call.
Correct Answer:
Verified
Correct Answer:
Verified
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