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:

Social Consensus

General agreement among members of a society or a group on basic values, beliefs, and norms.

Earth Moves

A term often related to the perceptible shifting or movement of the Earth’s surface due to natural phenomena like earthquakes.

Sun

The star at the center of our solar system, which is a nearly perfect sphere of hot plasma, generating energy and supporting life on Earth through its light and warmth.

Determinists

Individuals who believe in determinism, the doctrine that all events, including moral choices, are completely determined by previously existing causes.