A Call Option Is an Option Contract That Gives the Option

question 21

True/False

A call option is an option contract that gives the option holder the right to sell the optioned asset from the option writer at the striking price.

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Definitions:

Par Value

The nominal or face value of a stock or bond, as stated by the issuing company.

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Paid-In Capital

Represents the funds raised by a company through the sale of its own shares rather than through borrowed capital or earnings.

Stock Dividend

A dividend payment to shareholders in the form of additional shares of stock, rather than cash.