Which of the Following Is Not Correct

question 80

Multiple Choice

Which of the following is not correct?

• A) You pay interest on money borrowed to purchase stock on margin.
• B) Selling short is selling stock borrowed from a brokerage firm.
• C) A call option is the right, but not the obligation, to purchase a stock at a specified price by a given date.
• D) A brokerage firm receives double its commission when stock is bought and sold when the investor is selling short.
• E) If the stock price decreases and you purchased that stock on margin, you may receive a margin call.

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Definitions:

Liquidator

An external administrator appointed to dissolve the company.

Creditors

Individuals or entities that a company owes money to, typically as a result of receiving goods or services.

Dissolution

The process of legally dissolving a company, ending its existence by distributing its assets to creditors and shareholders.

Secured Creditor

A lender that has the right to claim specific assets of the borrower as repayment in case of default.