Which of the Following Statements Regarding Call Options Is True

question 24

Multiple Choice

Which of the following statements regarding call options is true?

• A)The price paid for a call option should reflect,amongst other factors,the probability that the underlying share price will rise above the exercise price.
• B)The price paid for a call option should reflect,amongst other factors,the expected future direction of the share price.
• C)The price paid for a call option should reflect,amongst other factors,the probability that the underlying share price will equal the exercise price.
• D)None of the given options.

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Definitions:

Complete Performance

The full and exact fulfillment of all terms and obligations as specified in a contract.

Limitation of Liability Clause

A contractual provision that limits the amount one party can claim from another in case of damage, loss, or injury.

Partial Summary Judgment

A legal decision made by a court on certain aspects of a case without a full trial, resolving some but not all of the issues.

Restraint of Trade

Restraint of trade refers to any activity or agreement that restricts competition or the free operation of the market.