If an Investor Buys a Put Option on Shares He

question 104

Multiple Choice

If an investor buys a put option on shares he owns and then the price of the shares rises,the investor:

• A) must exercise the option.
• B) must pay the difference between the contract start and close values.
• C) has no obligation to exercise the option.
• D) has to pay an additional premium to the option writer.

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Definitions:

Cash Disbursements

The total payments made by a business for various purposes, including expenses, purchases, and debt repayment.

Operating Expenses

Ongoing expenses incurred in the normal operations of a business, including rent, utilities, salaries, and marketing costs, but excluding the cost of goods sold.

Sales Budget

A detailed projection of future sales, often broken down by product line, region, or sales channel, that guides business planning.

Quarterly Sales

The total revenue generated from the sale of goods or services within a three-month period.