The Owner of a Regular Exchange-Listed Call-Option on a Stock

question 10

Multiple Choice

The owner of a regular exchange-listed call-option on a stock

• A)has the right to buy 100 shares of the underlying stock at the exercise price.
• B)has the right to sell 100 shares of the underlying stock at the exercise price.
• C)has the obligation to buy 100 shares of the underlying stock at the exercise price.
• D)has the obligation to sell 100 shares of the underlying stock at the exercise price.

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Definitions:

Price Strategies

Techniques used by companies to price their products or services with a view to maximizing profits or market share.

Marginal Revenue Function

The rate at which total revenue changes with respect to the output quantity change.

Marginal Costs

The added cost that comes from producing an additional unit of a product or service.

Kinked Demand Model

An economic model that suggests prices remain stable because firms in oligopoly markets may not adjust their prices in response to small shifts in demand or cost.