With a put option, what specifically does the option holder receive for the price paid for the option?
What will be an ideal response?
The option holder (buyer) receives the right but not the obligation, to sell the underlying asset at a specific (strike) price on or before the expiration date of the option. If the strike price is above the spot or current market price the option holder will profit from exercising the option. If the strike price is below the spot price of the underlying asset, the option holder will let the option simply expire.
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________ increases households' saving
A) A decrease in the real interest rate B) A tax cut that increases disposable income C) Higher expected future income D) A stock market boom that increases the purchasing power of households' wealth
Refer to the above figure. Suppose the economy is at point B and the central bank adopts expansionary monetary policy. In the short run, this will result in
A) the economy moving towards point A. B) the economy staying at point B. C) the economy moving towards point C. D) an outcome that cannot be predicted, as not enough information is given.