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:

Suretyship Relationship

is a legal arrangement where a surety guarantees the performance of a debtor's obligation to a creditor, assuming liability if the debtor fails to fulfill the contractual obligation.

Principal Debtor

The main individual or entity responsible for repaying a debt or obligation.

Ancillary Bailee

An individual or entity that is temporarily entrusted with someone else's property for a specific, ancillary service, without transfer of ownership.

Surety

A person or entity that takes responsibility for another's performance of an undertaking, such as fulfilling a contract.