For Puts and Calls, the Exercise Price Is Called

question 10

Multiple Choice

For puts and calls, the exercise price is called

• A) the expected value.
• B) the option price.
• C) the market price.
• D) the strike price.

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Definitions:

Reward to Risk Ratio

A metric used to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Total Risk

The overall risk associated with an investment, including both systematic and unsystematic risks.

Market Risk

The potential for a loss faced by an investor, which is attributed to elements that influence the total performance of the financial markets.

Firm-specific Risk

The portion of a company's risk that is attributable to its own operations and environment, as opposed to market-wide risk.