Which of the Following Statements Is FALSE

question 50

Multiple Choice

Which of the following statements is FALSE?

• A)A call option gives the owner the right to buy the asset.
• B)A put option gives the owner the right to sell the asset.
• C)A financial option contract gives the writer the right (but not the obligation)to purchase or sell an asset at a fixed price at some future date.
• D)A stock option gives the holder the option to buy or sell a share of stock on or before a given date for a given price.

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Definitions:

Stock Repurchases

This is a process where a company buys back its own shares from the marketplace, potentially reducing the total number of outstanding shares and often seen as a way to return value to shareholders.

Capital Gains Taxes

Taxes on the profit made from selling an asset for more than its purchase price.

Financial Leverage

The use of borrowed funds or debt to amplify returns from an investment or project.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to increase liquidity.