A Call Option Gives the Owner the

question 28

Multiple Choice

A call option gives the owner the

• A)right to sell the underlying security.
• B)obligation to sell the underlying security.
• C)right to buy the underlying security.
• D)obligation to buy the underlying security.

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Definitions:

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (income, expenditure, or asset), represented as a percentage.

Proportional

Characterized by or corresponding in size, degree, or intensity according to a fixed ratio or relationship.

Price Elasticity

A measure indicating how much the quantity demanded of a good responds to a change in its price, often illustrating the sensitivity of demand to price changes.

Relatively Elastic

Characterizes a situation where the quantity demanded of a good or service changes significantly due to a small change in price.