Stock Index Options 1) Permit the Investor to Short the Market Instead

question 52

Multiple Choice

Stock index options
1) permit the investor to short the market instead
Of individual stocks
2) require delivery of an index of stocks
3) limit the buyer's potential loss to the cost of
The option

• A) 1 and 2
• B) 1 and 3
• C) 2 and 3
• D) all of the above

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Definitions:

Zero Marginal Cost

The situation in which producing an additional unit of a good or service does not incur any additional cost.

Fixed Cost

Costs that do not change with the level of production or output, such as rent, salaries, and loan payments.

Patent

A legal right granted to an inventor that provides exclusive commercial rights to an invention or process for a certain period.

Inverse Demand Function

A mathematical formula that expresses the price of a good or service as a function of the quantity demanded, demonstrating how price is influenced by changes in demand.