Which of the following statements is? FALSE? A. The price at which the holder bu

Question

Which of the following statements is? FALSE?

A.

The price at which the holder buys or sells the share of stock when the option is exercised is called the strike price or exercise price.

B.

There are two kinds of options. European options allow their holders to exercise the option on any date up to and including a final date called the expiration date.

C.

Because an option is a contract between two? parties, for every owner of a financial? option, there is also an option? writer, the person who takes the other side of the contract.

D.

When a holder of an option enforces the agreement and buys or sells a share of stock at the

agreedminus?upon ?price, he is exercising the option

2.

Which shortminus?term financing policy states that shortminus?term cash needs should be financed with shortminus?term debt and longminus?term cash needs should be financed with longminus?term sources of? funds?

A.

matching principle

B.

aggressive policy

C.

conservatism principle

D.

evergreen credit

Explanation / Answer

There are two kinds of options. European options allow their holders to exercise the option on any date up to and including a final date called the expiration date.

European options can be exercised only at expiration

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