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Questions and Answers
Which of the following best describes a call option?
Which of the following best describes a call option?
- An option that gives the holder the right to buy an underlying asset at a specified price within a specific time period (correct)
- An option that gives the holder the right to buy an underlying asset at any time
- An option that gives the holder the right to sell an underlying asset at a specified price within a specific time period
- An option that gives the holder the right to sell an underlying asset at any time
Which of the following best describes a put option?
Which of the following best describes a put option?
- An option that gives the holder the right to sell an underlying asset at a specified price within a specific time period (correct)
- An option that gives the holder the right to sell an underlying asset at any time
- An option that gives the holder the right to buy an underlying asset at any time
- An option that gives the holder the right to buy an underlying asset at a specified price within a specific time period
What is the maximum potential loss for a buyer of a call option?
What is the maximum potential loss for a buyer of a call option?
- Unlimited
- The strike price
- The strike price minus the premium paid for the option
- The premium paid for the option (correct)
What is the maximum potential loss for a buyer of a put option?
What is the maximum potential loss for a buyer of a put option?
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Which of the following is true about short selling?
Which of the following is true about short selling?
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