The Buyer of a Call Option Has the Right to Exercise

question 6

Multiple Choice

The buyer of a call option has the right to exercise the option, but the writer of the call option has the

• A)choice to offset with a put option upon exercise.
• B)obligation to deliver the shares at the exercise price.
• C)choice to deliver shares or take a cash payoff.
• D)obligation to deliver a put option upon exercise.

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Definitions:

Normal Distribution

A bell-shaped frequency distribution curve, where most of the occurrences take place around the central peak and probabilities for values taper off equally on both sides.

Bushels

A unit of volume that is used in the United States for measuring agricultural produce such as grains.

Normal Model

A statistical model that describes data distribution patterns that follow a bell curve or Gaussian distribution.

Strawberries

A sweet, red, heart-shaped fruit commonly grown in temperate regions, known scientifically as Fragaria × ananassa.