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NEW QUESTION: 1
When a customer is offered a proposition that was already accepted, this is because__________.
A. the propositions are filtered based on eligibility
B. the strategy uses interaction history to exclude previously accepted offers
C. the customer intent was captured incorrectly
D. there is no filter for previously accepted offers in the strategy
NEW QUESTION: 2
Which of the following is true about the early exercise of an American call option:
A. An early exercise of an American call option is never a good idea as an option is always worth more alive than when it is dead
B. An early exercise of an American option, if ever to be done, should be done immediately after an ex-dividend date
C. An early exercise of an American call option is advisable whenever the option is deep in the money and delta approaches 1
D. An early exercise of an American call option may be justified if an extraordinarily large dividend payment is imminent
Generally, it is not a good idea to exercise an option early as any more upside in the remaining period to expiry is being sacrificed. However, if an extraordinarily large dividend is coming due, and this dividend is larger than the interest foregone from holding the option, it may be a good idea to exercise the option early. In such cases, the exercise needs to happen before the ex-dividend date and not afterwards. Choice 'b' is therefore the correct answer.
Even if the option is deep in the money and delta is approaching 1, and exercise upon maturity is almost a certainty, it would still always be better to sell the option than exercise it . Therefore Choice 'a' is incorrect.
Choice 'c' is correct in all cases except when a large dividend is coming in. Choice 'd' is not correct because an early exercise needs to happen prior to the ex-dividend date and not afterwards.
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