An Investor (The Buyer) Purchases a Call Option from a Seller

question 49

Multiple Choice

An investor (the buyer) purchases a call option from a seller. On the expiration date of a call option:

• A) the buyer has the obligation to buy the underlying asset and the seller has the obligation to sell it.
• B) the buyer has the right to buy the underlying asset and the seller has the obligation to sell it.
• C) the buyer has the obligation to sell the underlying asset and the seller has the right to buy it.
• D) the buyer has the right to sell the underlying asset and the seller has the right to buy it.

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Definitions:

Constraints

Limitations or restrictions that impact the options available for decision-making, project plans, or process outcomes.

IS Function

Information Systems Function, which encompasses the management of processes, hardware, software, and personnel involved in storing, retrieving, and processing information within an organization.

Technological Limitations

Constraints or restrictions imposed by the current state of technology, hindering progress or achieving certain goals.

NPV

Net Present Value, a financial metric that calculates the present value of all cash flows associated with an investment, including both inflows and outflows, discounted at the project's cost of capital.