When People Decorate the Exteriors of Their Homes with Colored

question 377

Multiple Choice

When people decorate the exteriors of their homes with colored lights, they create ________ for the motorists who pass by.

• A) an external benefit
• B) a competitive good
• C) a public good
• D) an excludable good

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Definitions:

Exercising Option

The act of implementing the right to buy or sell an underlying asset at a predetermined price before the option expires.

Option Contract

A financial derivative contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a specified time frame.

Underlying Asset

The financial asset upon which a derivative's price is based, such as stocks, bonds, commodities, or currencies.

Conversion Price

The predetermined price at which convertible securities can be exchanged for another form, typically common stock.