43) A call option gives the owner the A) obli B) gation to sell the underlying a

Question

43) A call option gives the owner the A) obli B) gation to sell the underlying asset at a fixed price right to buy the underlying asset at a fixed price C) right to sell the underlying asset at a fixed price D) obligation to buy the underlying asset at a fixed price 44) A put option gives the owner the A) right to sell the underlying asset at a fixed price. B) right to buy the underlying asset at a fixed price C) obligation to buy the underlying asset at a fixed price D) obligation to sell the underlying, asset at a fixed price 45) An example of a financial instrument in the capital market is A) a negotiable bank CD. C) commercial paper 45) B) a corporate bond. D) a U.S. Treasury bill. 46) That segment of the market for securities which have original maturities of more than one year is46) called the A) capital market. C) stock market. B) money market D) derivative securities market 47 47) A business firm that has temporary surplus funds' is most likely to buy A) corporate stock C) US Treasury bonds B) corporate bonds D) U.S. Treasury bills 48) 48) Financial institutions are just like other firms in that they attempt to maximize B) profits D) total liabilities C) capital. A) total assets 49) 49) Which of these institutions has the greatest degree of certainty regarding the timing of liability A) Property and casualty insurance companies B) Life insurance companies C) Money market mutual funds D) Credit unions payouts? 50) B) money market mutual funds D) finance companies A) bond mutual funds C) savings and loan associations (S&Ls;) 50) Savings banks are very similar to

Explanation / Answer

43)

Call option buyer has an option to buy the underlying asset of the call option at his option. If the strike price is favourable, he will exercise the option else he will not exercise the option.

Hence, correct option is (B).

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