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.

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Definitions:

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced changes by one unit. It's pivotal in decision-making processes regarding increasing or decreasing production.

Marginal Revenue

The extra financial gain from selling an additional unit of a product or service.

Profit

The profit earned when the revenue generated from a business operation surpasses all its associated expenses, costs, and taxes required for the operation.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single participant can significantly influence price or supply.