If there are no dividends on a stock, which of the following statements is correct?
A) An American call will sell for more than a European call
B) A European call will sell for more than an American call
C) An American call will be immediately exercised
D) An American call and an American put will sell for the same price
E) none of the above

Question

Quizplus · Accepted Answer

Without dividends, the early exercise feature of an American call option has no advantage over a European call, so they should be priced the same. Therefore, none of the statements A, B, C, or D are correct.

If There Are No Dividends on a Stock, Which of the Following