Which of the Following Statements Is FALSE

question 56

Multiple Choice

Which of the following statements is FALSE?

• A)Because a short position in an option is the other side of a long position,the profits from a short position in an option are just the negative of the profits of a long position.
• B)The deeper out-of-the-money the put option is,the less negative its beta,and the higher is its expected return.
• C)Although payouts on a long position in an option contract are never negative,the profit from purchasing an option and holding it to expiration could well be negative because the payout at expiration might be less than the initial cost of the option.
• D)The put position has a higher return in states with low stock prices;that is,if the stock has a positive beta,the put has a negative beta.

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Definitions:

Structural Unemployment

A situation where there is a mismatch between the skills workers have and the skills needed by employers due to technological changes or other factors.

Labor Unions

Organizations formed by workers from related fields that work for the common interest of its members in terms of wages, working hours, working conditions, and other employment matters.

Natural Rate

The unemployment rate at which the economy operates at full capacity, with only frictional and structural unemployment.

Right-To-Work Laws

Laws that prohibit union security agreements, ensuring that employment is not conditioned on union membership or financial support.