A Call Option on a Stock Is a Financial Instrument

question 90

Multiple Choice

A call option on a stock is a financial instrument defined by which of the following statements?

• A) It obligates the investor holding it to sell the stock at the specified price at the stated date in the future.
• B) It obligates the investor holding it to buy the stock at the specified price at the stated date in the future.
• C) It gives the investor holding it the right, but not the obligation, to buy the stock at the specified price at the stated date in the future.
• D) It gives the investor holding it the right, but not the obligation, to sell the stock at the specified price at the stated date in the future.

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Definitions:

Critical Thought

The process of independently analyzing, synthesizing, and evaluating information as a guide to behavior and beliefs.

Sensationalized Depictions

Exaggerated or dramatic portrayals of events or situations, often in media, to attract attention.

Tolerance for Injustice

The degree to which an individual or society is willing to accept or endure unfairness or wrongdoing without demanding justice.

Stereotyping

Labeling people based on their membership in a group.