Which of the Following Is NOT True for the Writer

question 27

Multiple Choice

Which of the following is NOT true for the writer of a put option?

• A) The maximum loss is limited to the strike price of the underlying asset less the premium.
• B) The gain or loss is equal to but of the opposite sign of the buyer of a put option.
• C) The maximum gain is the amount of the premium.
• D) All of the above are true.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of an investment.

Cash Sales Policy

A cash sales policy is a company's strategy to require payment for goods or services at the time of sale, which can improve cash flow and reduce credit risk.

Net 30 Credit Policy

A payment term that allows the buyer 30 days to pay the invoice in full from the invoice date.

Monthly Interest Rate

The percentage of interest charged or earned on a principal amount on a monthly basis.