Question: True or False? Explain the correct answer: a. An American call option on a non-dividend-paying stock will never be exercised early. b. An American or

True or False? Explain the correct answer:

a. An American call option on a non-dividend-paying stock will never be exercised early.

b. An American or European call option may be worth more than the stock.

c. A long call and a short put on the same stock and same exercise price and time to maturity is equivalent to a short position in forward.

d. We can use an arbitrage portfolio to price a portfolio of stocks.

e. The top straddle can be constructed by buying a call and put with the same exercise price and time to maturity.

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