The Writer of a Put Option ________

question 34

Multiple Choice

The writer of a put option ________.

• A) agrees to sell shares at a set price if the option holder desires
• B) agrees to buy shares at a set price if the option holder desires
• C) has the right to buy shares at a set price
• D) has the right to sell shares at a set price

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Definitions:

Lock-up Restrictions

Contractual limitations on the sale of securities, typically imposed on company insiders following an initial public offering.

Less Liquid

A term describing an asset that cannot be quickly sold or converted into cash without significant loss of value.

More Liquid

Describes an asset or market that allows for assets to be bought or sold quickly without significantly affecting the asset's price.

Front-end Commission

A fee paid when purchasing shares of a mutual fund, upfront, which reduces the amount invested from the start.