After Purchasing a Call Option, the Buyer Will Exercise the Option

question 11

Multiple Choice

After purchasing a call option, the buyer will exercise the option only if

• A)the price of the financial asset is less than the strike price.
• B)the price of the financial asset is equal to the strike price.
• C)the price of the financial asset is greater than the strike price.
• D)the price of the financial asset is initially less than the strike price in the long run.

---

Definitions:

Foreign Portfolio Investment

Investment in financial assets from another country, such as stocks or bonds, that does not grant the investor control over the business entities in which the investment is made.

U.S. Government Bonds

Securities issued by the United States Department of the Treasury to finance government spending.

Net Capital Outflow

The difference between a nation's savings and its domestic investments, representing international transfers of capital.

U.S. Assets

Assets located within the United States that may include real estate, stocks, bonds, and other financial instruments owned by individuals, companies, or the government.