The Seller of a Call Option Has

question 511

Multiple Choice

The seller of a call option has:

• A) Substantial opportunity for gain and limited risk of loss
• B) Substantial risk of loss and substantial opportunity for gain
• C) Limited risk of loss and limited opportunity for gain
• D) Substantial risk of loss and limited opportunity for gain

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Definitions:

Price Elasticity of Supply

The measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price.

Demand-Side

Pertaining to the aspects of the economy influenced by consumer spending and preferences, impacting overall demand for goods and services.

Market Failure

The inability of a market to bring about the allocation of resources that best satisfies the wants of society; in particular, the overallocation or underallocation of resources to the production of a particular good or service because of externalities or asymmetric information, or because markets fail to provide desired public goods.

Producer

An individual, company, or entity that creates goods or services to satisfy consumer demands.