Who Will Lose If the Price of an Underlying Asset

question 57

Multiple Choice

Who will lose if the price of an underlying asset falls?

• A) the seller of a futures contract
• B) the buyer of a put
• C) the writer of a call
• D) the buyer of a futures contract
• E) both b and c

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Definitions:

Recreation Center

A facility provided for leisure activities which may include sports fields, swimming pools, and other amenities for public use.

Marginal Costs

Refers to the increase in total production cost that arises when the quantity produced is incremented by one unit.

Flood-Control

A set of measures implemented to prevent or reduce the damage caused by excessive water accumulation from rivers, seas, or heavy rainfall.

Median-Voter Model

The theory that under majority rule the median (middle) voter will be in the dominant position to determine the outcome of an election.