Which of the Following Option Traders Receive,rather Than Pay,a Premium

question 107

Multiple Choice

Which of the following option traders receive,rather than pay,a premium?

• A) Option sellers
• B) Option buyers
• C) Both option sellers and buyers
• D) Neither buyers nor sellers receive premiums

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Definitions:

Bank Discount Yield

A measure of the annualized yield on a short-term, non-interest bearing security like a Treasury bill, calculated using the discount from face value and the time to maturity.

Securitization

The financial process of pooling various types of contractual debt, such as mortgages or loans, and selling them as consolidated financial instruments to investors.

Mortgage Pass-Through Security

A type of investment that pools mortgage loans together and allows investors to receive payments derived from the underlying mortgages.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.