If You Thought the Share Price of a Stock Was

question 48

Multiple Choice

If you thought the share price of a stock was going to rise,would you be more likely to buy a call option or a put option?

• A) a call option
• B) a put option
• C) a call option and a put option
• D) There is not enough information given to answer this question.

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Definitions:

Budget Slack

The practice of underestimating revenue or overestimating costs while preparing a budget to create a buffer, which can be used to handle unforeseen financial situations.

Planning

The process of setting goals, determining resources needed to achieve those goals, and outlining the steps necessary to accomplish them.

Loose Budgets

A financial plan that allows for higher spending and less stringent controls, often to accommodate for uncertainty or to encourage creativity and innovation.

Cash Budget

A financial plan that estimates incoming and outgoing cash flows over a specific period of time to ensure liquidity and solvency.