When a Put Option Is Exercised, The

question 80

Multiple Choice

When a put option is exercised, the:

• A)seller of the option receives the strike price.
• B)seller of the option receives the option premium.
• C)buyer of the option sells the underlying asset and receives the option premium.
• D)buyer of the option pays the option premium and receives the underlying asset.
• E)seller of the option must buy the underlying asset and pay the strike price.

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Definitions:

Long-Run Supply Curve

A graphical representation showing the relationship between price and the quantity supplied over time, when all inputs can be adjusted.

Competitive Market

A market structure characterized by many buyers and sellers, resulting in competition that influences prices and product offerings.

Limited Quantities

Refers to the restricted availability of goods or resources, which can affect pricing, demand, and supply conditions.

Opportunity Costs

The penalty of bypassing the next most advantageous option when a decision is made.