If You Own a Call and a Put on a Stock

question 21

Multiple Choice

If you own a call and a put on a stock with the same exercise price and exercise date,your payoffs:

• A) will be positive only if the stock price rises.
• B) will be positive only if the stock price declines.
• C) will always be positive and will increase with the size of the stock price change.
• D) will always be positive but will be larger if the stock price is relatively stable.

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Definitions:

Organizational Politics

Refers to informal, unofficial, and sometimes behind-the-scenes efforts to sell ideas, influence an organization, increase power, or achieve other targeted objectives.

Organizational Power

Relates to the capacity of individuals or groups within an organization to influence decisions, control resources, and direct the behavior of others.

Change Management

The process, tools, and techniques used to manage the people side of change to achieve a required business outcome.

Organizational Politics

The activities undertaken within an organization to acquire, develop, and use power and other resources to obtain one’s preferred outcomes in a situation involving uncertainty or disagreement.