Speculators Make Their Profits on

question 47

Multiple Choice

Speculators make their profits on

• A)price differences in different time periods.
• B)price increases from inflation.
• C)avoiding double taxation of income.
• D)the difference in interest rates on stocks and bonds.

---

Definitions:

Strike Price

The predetermined price at which the holder of an option can buy (in a call option) or sell (in a put option) the underlying asset.

Call Option

An economic agreement granting the purchaser the option to acquire an asset at a predetermined price during a designated timeframe, without being compelled to do so.

Market Price

The existing cost at which an asset or service is being offered for buying or selling in the market.

American Put Option

An option contract giving the holder the right to sell an asset at a specified price at any time before the expiration date.