23-68 Which of the Following Holds True for the Writer

question 24

Multiple Choice

23-68 Which of the following holds true for the writer of a call option if interest rates decrease?

• A)Makes profits limited to call premium
• B)Makes losses limited to call premium
• C)Potential to make large losses
• D)Potential to make unlimited profits
• E)Answers B and D only.

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Definitions:

Majority-minority

A demographic term used when the combined minority populations surpass the number of the majority population.

Pluralistic

A condition or system in which two or more states, groups, principles, sources of authority, etc., coexist.

Minority Group

A social group that is systematically denied the same access to power and resources available to society’s dominant groups though its members are not necessarily fewer in number than the dominant groups.

Power

Denotes the capacity or ability to direct or influence the behavior of others or the course of events.