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:

CCA Tax Shield

A deduction that allows businesses to depreciate the cost of capital assets over time against their taxable income, reducing the tax payable.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, reflecting the proportion of additional income paid in taxes.

Relevant Discount Rate

The interest rate used to convert future payments or receipts into their present value, often reflecting the risk associated with the cash flows.

Salvage Value

The estimated resale value of an asset at the end of its useful life, reflecting what a company expects to recover, less disposal costs, once an asset is no longer needed for business operations.