Fact Pattern 15-B3 (Questions B14-B15 Apply)

question 38

Multiple Choice

Fact Pattern 15-B3 (Questions B14-B15 apply)
In selling a commercial building,Birdie tells Colt that the property has a certain capacity,making it suitable for a nightclub.Birdie knows nothing about the capacity of the building,but it is not as she specifies.Colt buys the building.
-Refer to Fact Pattern 15-B3.Under these circumstances,Colt's best course of action is most likely to

• A)scam Birdie.
• B)induce Birdie to give him the commission on her next sale.
• C)recover damages or rescind the contract to buy the building.
• D)sabotage Birdie's career with bad publicity.

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Definitions:

Digital Option

A financial instrument that provides a fixed return if the market price is above (for a call) or below (for a put) a certain level at expiration.

Bull Money Spread

A type of options strategy that is used when an investor expects a moderate rise in the price of the underlying asset.

Calls

Calls are options contracts giving the holder the right, but not the obligation, to buy a specified amount of an underlying security at a predetermined price within a specified time frame.

Option Quotes

Information about the price of an option contract, including its bid and ask prices, and sometimes the volume and open interest.