Which of the Following Statements Is False

question 29

Multiple Choice

Which of the following statements is false?

• A) A holder would not exercise an in-the-money option.
• B) The option seller, also called the option writer, sells (or writes) the option and has a short position in the contract.
• C) Because the long side has the option to exercise, the short side has an obligation to fulfill the contract.
• D) When the exercise price of an option is equal to the current price of the stock, the option is said to be at-the-money.

---

Definitions:

Profit Or Loss

The financial result of a company’s operations and activities for a specific period, indicating the difference between revenues and expenses.

Wheat Futures Contracts

A standardized contract to buy or sell a specific amount of wheat at a future date, used for hedging or speculative purposes in the commodities market.

Payoff

The return or final outcome received from an investment, which could be positive or negative.

Maturity Date

The date on which a debt obligation must be repaid in full, including any principal and accrued interest.