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:

Economy

The collective system of production, consumption, and trade of goods and services within a particular area or country.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, highlighting the trade-offs involved.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of their funds.

Expected Profit Rate

The forecasted return on investment, predicting the percentage of profit relative to costs.