8. Which of the following statements about an American call option is not true? a. its time value decreases as expiration approaches b. its maximum value is the stock price c. it can be exercised prior to expiration d. it pays dividends e. none of the above 9. Taking advantage of the right embodied in an option is known as: a. straddling b. exercising c. spreading d. discounting e. striking 10. Which of the following are not characteristic of put and call options? a. They are contracts to buy or sell 100 shares of common stock. b. There is always a specified price. c. There is always a specific time period. d. All of the above are characteristics. 11. A major disadvantage of using call options to hedge a short position is a. hedging increases the risk of loss on the short sale b. the option premium and commissions reduce profit potential c. the price of the stock may go up d. none of the above