If You Thought the Share Price of a Stock Was

question 44

Multiple Choice

If you thought the share price of a stock was going to fall,would you be more likely to buy a call option or a put option?

• A) a call option
• B) a put option
• C) a call option and a put option
• D) There is not enough information given to answer this question.

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Definitions:

Default Risk

The possibility that a borrower will fail to pay back a loan according to the agreed terms.

Debt Financing

The process of raising capital through the sale of bonds or obtaining a loan, where the borrowed amount is expected to be repaid with interest.

Tax-Deductible

Expenses that can be subtracted from gross income to reduce the amount of income that is subject to tax.

Operating Cash Flows

Operating cash flows refer to the cash generated from a company's regular business operations, reflecting its ability to generate sufficient cash to maintain operations.