A European Call Option Allows the Buyer to

question 16

Multiple Choice

A European call option allows the buyer to

• A) sell the underlying asset at the exercise price on the expiration date.
• B) buy the underlying asset at the exercise price on or before the expiration date.
• C) sell the option in the open market prior to expiration.
• D) buy the underlying asset at the exercise price on the expiration date.
• E) sell the option in the open market prior to expiration and buy the underlying asset at the exercise price on the expiration date.

---

Definitions:

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables.

Trend Projection

A forecasting technique that involves analyzing historical data to identify consistent results or directions over time.

Linear Regression

A statistical method used to model the relationship between a dependent variable and one or more independent variables.

Independent Variable

A variable in an experiment or model that is manipulated or changed to observe its effects on a dependent variable.