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Fundamentals of Corporate Finance

What kind of option allows the holder to exercise the option only the expiration date?

Concept 21.1-11 – Option to exercise and obligation to fulfill the contract

Fundamentals of Corporate Finance

Berk, DeMarzo, and Harford

05th Edition

The person that takes the ___ side of an option has the choice to exercise, while the person that takes the ____ side of the option has the obligation to fulfill the contract.

Concept 21.1-13, 21.15 at, in, or out of the money?

Fundamentals of Corporate Finance

Berk, DeMarzo, and Harford

05th Edition

If the exercise price of an option equals the current stock price, the option is _____.
If the exercise price of a call is greater than the current price, the option is ____.
If the exercise price of a call is lower than the current price, the option is ____.
If the exercise price of a put is greater than the current price, the option is ____.
If the exercise price of a put is lower than the current price, the option is ____.

Concept 21.1-17 – Find the false statement

Fundamentals of Corporate Finance

Berk, DeMarzo, and Harford

05th Edition

Of the following choices, identify which is false:

The owner of a put option has the right but not the obligation to sell the underlying asset.
Financial options contracts give the writer the right, but not the obligation to purchase or sell the underlying asset at the strike (fixed) price at some future date.
The owner of a call option has the right to buy the underlying asset
The holder of a stock option can choose to buy or sell a share of stock.