A Put Option: I. Is a Form of Derivative

question 26

Multiple Choice

A put option:
I. Is a form of derivative
II. Gives the holder the right to sell the underlying asset by a certain date at a certain price
III. Is used to protect price declines
IV. Authorizes the holder to "put away" a stock
V. Is traded on Chicago Board Options Exchange

• A) All the statements are correct
• B) Only IV is correct
• C) Only IV is incorrect
• D) II, III, and IV are correct
• E) III, IV, and V are correct

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Definitions:

Redemption Date

The specific date at which a bond or other debt instrument can be repaid before its maturity.

Initial Public Offerings

The process by which a private company offers shares to the public in a new stock issuance to raise capital.

SEC

The U.S. Securities and Exchange Commission, a federal agency responsible for regulating the securities industry and protecting investors.

Prospectus Approval

Prospectus approval is the formal authorization for the issuance of a prospectus by regulatory authorities, detailing a company's financials and operations for investors.