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ABEX Corporation common stock is selling for $50.00 per share. Both an American call option and a European call option are available on ABEX common, and each have identical strike prices and expiration dates. Which of the following statements concerning these two options is TRUE? A. Because the American and European options have identical terms and are written against the same common stock, they will have identical option premiums. B. The American option will have a higher option premium, because the American security markets are larger than the European markets. C. The European option will normally have a higher option premium because of their relative scarcity compared to American options. D. The greater flexibility allowed in exercising the American option will normally result in a higher market value relative to an otherwise identical European option. |