Which of the Following Statements Is False

question 25

Multiple Choice

Which of the following statements is false?

• A) A call option gives the owner the right to buy the asset.
• B) A put option gives the owner the right to sell the asset.
• C) A financial option contract gives the writer the right (but not the obligation) to purchase or sell an asset at a fixed price at some future date.
• D) A stock option gives the holder the option to buy or sell a share of stock on or before a given date for a given price.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the opportunity cost of capital.

Tax Credit

An amount that taxpayers can subtract directly from taxes owed to their government.

Forecast Error

Forecast error is the difference between the actual value and the predicted value in a forecast, indicating the accuracy of forecasting models.

IRR

Internal Rate of Return, a financial metric used to evaluate the profitability of potential investments.