Which of the Following Statements Is FALSE

question 49

Multiple Choice

Which of the following statements is FALSE?

• A)An option holder would not exercise an in-the-money option.
• B)The option seller,also called the option writer,sells (or writes)the option and has a short position in the contract.
• C)Because the long side of an option contract has the option to exercise,the short side has an obligation to fulfill the contract.
• D)When the exercise price of an option is equal to the current price of the stock,the option is said to be at-the-money.

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Definitions:

Operating Activities Section

A part of a company's cash flow statement that shows the cash flow from its core business operations.

Direct Method

A method of computing the net cash provided by operating activities in which the income statement is reconstructed on a cash basis from top to bottom.

Indirect Method

A method of computing the net cash provided by operating activities that starts with net income and adjusts it to a cash basis. It is also known as the reconciliation method.

Inventory

Raw materials, work-in-process, and finished goods that a company holds with the intent to sell or use in production.