Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)When a holder of an option enforces the agreement and buys or sells a share of stock at the agreed-upon price,he is exercising the option.
• B)There are two kinds of options.European options allow their holders to exercise the option on any date up to and including a final date called the expiration date.
• C)Because an option is a contract between two parties,for every owner of a financial option there is also an option writer,the person who takes the other side of the contract.
• D)The price at which the holder buys or sells the share of stock when the option is exercised is called the strike price or exercise price.

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Definitions:

Expected Value

The anticipated value or outcome of a variable, computed as an average of all possible outcomes each weighted by its respective probability of occurrence.

Coefficient Of Variation

A statistical measure used to analyze the relative variability of data points in a dataset or the risk per unit of return; it is the ratio of the standard deviation to the mean.

Well-Diversified Portfolio

An investment portfolio consisting of a wide variety of assets to reduce exposure to risk through diversification.

Beta

A measure of a stock's volatility in relation to the overall market, indicating its risk compared to the market average.