A Call Option Differs from a Put Option in That

question 24

Multiple Choice

A call option differs from a put option in that

• A) a call option obliges the investor to purchase a given number of shares in a specific common stock at a set price; a put obliges the investor to sell a certain number of shares in a common stock at a set price.
• B) both give the investor the opportunity to participate in stock market dealings without the risk of actual stock ownership.
• C) a call option gives the investor the right to purchase a given number of shares of a specified stock at a set price; a put option gives the investor the right to sell a given number of shares of a stock at a set price.
• D) a put option has risk because leverage is not as great as with a call.
• E) All of these are correct.

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Definitions:

Amortized

The process of paying off a debt or loan in regular installments over a set period of time, which includes both principal and interest.

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.

Entire Business

Refers to the complete scope or operation of a company, encompassing all its functional areas and activities.

Legal Costs

Expenses associated with the legal process, including lawyer fees, court fees, and other costs incurred during legal proceedings.