Which of the Following Is NOT True for the Writer

question 27

Multiple Choice

Which of the following is NOT true for the writer of a put option?

• A) The maximum loss is limited to the strike price of the underlying asset less the premium.
• B) The gain or loss is equal to but of the opposite sign of the buyer of a put option.
• C) The maximum gain is the amount of the premium.
• D) All of the above are true.

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Definitions:

Flexible Exchange Market

A foreign exchange system where the value of currencies are determined by market forces without direct government intervention.

Equilibrium Exchange Rate

The exchange rate at which the demand for a currency equals its supply in the foreign exchange market, resulting in a stable market price.

Euros

The official currency of the Eurozone, which is used by 19 of the 27 European Union countries, known collectively as the Euro area.

Foreign Currencies

The currencies of other countries, used for conducting international transactions or as an investment.