An Individual Who Speculates by Selling a Call Option Wants

question 13

Multiple Choice

An individual who speculates by selling a call option wants to bet that:

• A)The market price of the underlying asset will rise.
• B)The option expires worthless.
• C)The price of the underlying asset will not rise.
• D)The price of the underlying asset will not fall.

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Definitions:

Assumption Of Risk

A traditional defense to negligence liability based on the argument that the plaintiff voluntarily exposed himself to a known danger created by the defendant’s negligence.

Comparative Fault

Often used synonymously with comparative negligence. But also sometimes used to refer to a defense that operates like comparative negligence but considers the plaintiff’s and the defendant’s overall fault rather than either’s negligence alone.

Fault

A defect, mistake, or error in a system or character that often leads to malfunction or adverse outcomes.

Legal Theory Of Negligence

A legal doctrine that makes a person or entity liable for harm caused by failing to act as a reasonably prudent person would under the same circumstances.