You Purchased a May American Put Option on Netscape Stock

question 264

Multiple Choice

You purchased a May American put option on Netscape stock with an exercise price of $165. Which of the following statements is true?

• A) You have the right to buy Netscape shares for $165 at any time prior to the option expiration in May, regardless of the stock's market price.
• B) You are obligated to buy Netscape shares for $165 when the option expires in May, regardless of the stock's market price.
• C) You have the right to sell Netscape shares for $165 at any time prior to the option expiration in May, regardless of the stock's market price.
• D) You are obligated to sell Netscape shares for $165 when the option expires in May, regardless of the stock's market price.
• E) You have the right to sell Netscape shares for $165 at any time prior to the option expiration in May, but only if the stock price is greater than $165.

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Definitions:

Calculus-Based Trust

Trust built on the expectation that others will act predictably based on past interactions.

Reward

A benefit, prize, or compensation given in recognition of one's effort, performance, or service.

Punishment

The imposition of a penalty as retribution for an offense, or as a means of influencing future behavior.

Relationship Negotiations

Negotiation processes that prioritize maintaining and strengthening the relationship between the parties involved.