Use the Following Statements to Answer the Following Question

question 54

Multiple Choice

Use the following statements to answer the following question:
I.A call option provides insurance against the decrease of the stock price below the strike price.
II.The buyer of a call option pays a premium regardless of the underlying asset price.

• A)I and II are correct
• B)I is correct and II is incorrect
• C)I is incorrect and II is correct
• D)I and II are incorrect

---

Definitions:

1099 Forms

Tax documents used in the United States to report various types of income other than wages, salaries, and tips.

Federal Income Tax

A tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Social Security

A government program that provides financial assistance to people with insufficient or no income, especially the elderly, disabled, and unemployed.

Medicare Taxes

Federal taxes that fund Medicare, deducted from employees' paychecks and matched by employers.