Which Statement Is Correct Regarding a Company Which Buys Call

question 10

Multiple Choice

Which statement is correct regarding a company which buys call options on its own shares from an outside company?

• A)Issued options are always antidilutive.
• B)Issued options are always dilutive.
• C)Purchased options are always antidilutive.
• D)Purchased options are always dilutive.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, leading to competition based on product differentiation.

Four-Firm Concentration Ratio

A metric that measures the total market share held by the top four firms within a specific industry, indicating the level of market concentration.

Herfindahl Index

A measure of market concentration used to determine the competitiveness of an industry, calculated by squaring the market share of each firm competing in the market.

Oligopoly

A market structure characterized by a small number of firms that dominate the market, leading to limited competition and potential for collusion.