If You Want the Right, but Not the Obligation, to Sell

question 33

Multiple Choice

If you want the right, but not the obligation, to sell a stock at a specified price you should:

• A)buy a call.
• B)sell a call.
• C)buy a put.
• D)sell a put.
• E)either sell a call or buy a put.

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Definitions:

Nonconventional Flows

Atypical or irregular cash flows in an investment, complicating the assessment of an investment's value or project's profitability.

Profitability Index

A calculation that measures the relative profitability of an investment, by dividing the present value of future cash flows by the initial investment cost.

Share Price

The current price at which a single share of a company's stock can be bought or sold in the financial markets.

Profitability Index

A financial tool used to determine the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.