The Value of a Stock Option Is Dependent Upon the Value

question 17

Multiple Choice

The value of a stock option is dependent upon the value of the underlying stock. Thus, a stock option is a:

• A) forward agreement.
• B) derivative security.
• C) mezzanine asset.
• D) contingent security.
• E) junior security.

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Definitions:

Hyperactive

Hyperactive describes a condition of having more energy and movement than is normal or desirable, often associated with attention deficit hyperactivity disorder (ADHD).

Hyper-

A prefix meaning above or excessive, used to describe conditions of overactivity or elevated levels (e.g., hypertension).

Dys-

A prefix in medical terms indicative of abnormal, difficult, or painful conditions.

Diagnosis

The identification of the nature of an illness or other problem by examination of the symptoms.