The Maximum Amount That an Option Buyer Can Lose Is

question 26

Multiple Choice

The maximum amount that an option buyer can lose is the ________ price. The maximum profit that the option writer (seller) can realize is the ________ price.

• A) option; exercise
• B) call; option
• C) option; option
• D) call; put

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Definitions:

Useful Life

The estimated period over which an asset is expected to be utilized by an entity, affecting its depreciation or amortization rates.

Carrying Amount

The value at which an asset or liability is recognized on the balance sheet after deducting any accumulated depreciation, impairment, or amortization.

Technology

The application of scientific knowledge for practical purposes, specifically in industry and commerce, including the development and use of digital tools and systems.

Straight-Line Method

An accounting method of depreciation where the value of a fixed asset is reduced uniformly over its useful life.