The Buyer of a Long Call Option

question 75

Multiple Choice

The buyer of a long call option:

• A) has a maximum loss equal to the premium paid.
• B) has a gain equal to but opposite in sign to the writer of the option.
• C) has an unlimited maximum gain potential.
• D) all of the above

---

Definitions:

Standard Deviation

A statistical measure of the dispersion of a set of data points from their mean, widely used in finance to quantify the variability of returns.

Required Return

The minimum expected return an investor demands for investing in a particular asset, considering the risk involved.

Correlation Coefficients

Statistical measures that indicate the extent to which two variables fluctuate together.

Risk-Free Rate

The rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.