Which of the Following Is True for the Owner of a Call

question 11

Multiple Choice

Which of the following is true for the owner of a call option?

• A) The loss potential is unlimited.
• B) The profit potential is unlimited.
• C) The premium exceeds the strike price.
• D) There is no expiration date, unless the option is a European call.

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market equilibrium price.

Demand Increases

A situation wherein there is a rise in the quantity of a product or service sought after by consumers at a given price level.

Equilibrium Price

The price level at which the amount of products available for sale matches the amount consumers want to buy.

Equilibrium Quantity

The quantity of goods or services supplied that is exactly equal to the quantity demanded at the market equilibrium price.