​When a Call Option Is Exercised

question 42

Multiple Choice

​When a call option is exercised,

• A) ​the firm issues new stock
• B) the writer supplies the stock
• C) the firm's earnings are diluted
• D) ​the option is converted into stock

---

Definitions:

Null Hypothesis

A statement in statistics that proposes there is no significant effect or difference between specified populations, any observed difference being due to sampling or experimental error.

Observed Difference

The apparent discrepancy or variation between two groups or conditions in an experiment or study.

Random Error

An unpredictable variation in data or experimental results, which occurs without a discernible pattern.

Systematic Variance

Variability in a set of scores that is the result of the independent variable; statistically, the variability of each group mean from the grand mean of all subjects.