Which of the Following Is Not True Concerning Call Option

question 64

Multiple Choice

Which of the following is not true concerning call option writers?

• A) Writers promise to deliver shares if exercised by the buyer.
• B) The writer has the option to sell shares but not an obligation.
• C) The writer's liability is zero if the option expires out-of-the-money.
• D) The writer receives a cash payment from the buyer at the time the option is purchased.
• E) The writer has a loss if the market price rises substantially above the exercise pricE.

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Definitions:

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, providing insight into its profitability.

Cash Flow

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Reported Profits

These are the earnings a company officially announces to the public and regulatory bodies, reflecting its performance over a specific period.

Common Stock

Common stock represents shares of ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.