The Writer of a Put Option on a Stock

question 2

Multiple Choice

The writer of a put option on a stock

• A)Has the right but not the obligation to sell the stock.
• B)Has the right but not the obligation to buy the stock.
• C)Has the obligation but not the right to sell the stock.
• D)Has the obligation but not the right to buy the stock.

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Definitions:

Contrast Effect

A cognitive bias where the evaluation of something is influenced by comparisons with recently encountered contrasting objects or events.

Perceptual Bias

The tendency for perception to be affected by one's experiences, beliefs, or expectations, leading to a distorted or incomplete understanding of reality.

Oral Communication

The exchange of information or ideas through spoken words.

Schemas

Cognitive frameworks that represent organized knowledge developed through experience about people, objects, or events.