Owning a Call Option That Has a High Probability of Being

question 6

Multiple Choice

Owning a call option that has a high probability of being exercised is said to be equivalent to owning the stock.In which way is owning a call not equivalent to owning the stock?

• A)Option holders pay no income taxes.
• B)Shareholders do not have capped (restricted) profits.
• C)Option holders do not receive dividends.
• D)Shareholders cannot sustain losses.

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Definitions:

Overt Power

The visible, explicit, and acknowledged capacity to influence others or the outcome of events.

Coercive Power

The ability to influence others' behavior through threats, punishment, or sanctions.

Employees' Participation

The involvement of employees in making decisions that affect their work and the organization.

Fostering Participation

Encouraging and facilitating engagement and active involvement of individuals or groups in activities, decision-making processes, or projects.