The Price That the Writer of a Call Option Receives

question 44

Multiple Choice

The price that the writer of a call option receives for the underlying asset if the buyer executes her option is called the

• A) strike price.
• B) exercise price.
• C) execution price.
• D) strike price or exercise price.
• E) strike price or execution price.

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Definitions:

Posterior Probability

The probability of a hypothesis being true after taking into account new evidence or information.

Well-Shuffled Cards

A state in which the order of cards in a deck is randomized, ensuring that no predictable patterns interfere with the randomness of card games.

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False Negative

An error in binary classification where a test incorrectly indicates the absence of a condition when it is actually present.