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Which of the following is NOT true?
When a CBOE call option on IBM is exercised, IBM issues more stock
An American option can be exercised at any time during its life
A call option will always be exercised at maturity if the underlying asset price is greater than the strike price
A put option will always be exercised at maturity if the strike price is greater than the underlying asset price

Respuesta :

Answer:

When a CBOE call option on IBM is exercised, IBM issues more stock.

Explanation:

Chicago Board Options Exchange (CBOE) is one of the largest exchanges for options. It focuses on index, interest rates and equity. When a call option of IBM is exercised the seller will buy shares and when put option is exercised the seller will sell share to buy to the option buyer. In either cases IBM is not involved and will not issue more stock. The statement which says that when a call option is exercise IBM will issues more stock is not correct.

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