If the option holder is the individual with the options, why is anyone an option writer?
What will be an ideal response?
Option writers really fall into two categories. One group is simply speculators. These individuals are willing to bet that the market price will not move against them and they will take this risk for the fee they obtain. The second category includes holders of the asset who can write a call option or dealers who are short of the underlying asset who can write a put option. When you own the underlying asset writing a call option that obligates you to sell it at a fixed price does not carry as much risk. Similarly, when a dealer is short of the underlying asset, it is less risky to sell a put option.
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Refer to the table above. If imports falls to $45,000 in the next year, ________, all other variables remaining unchanged
A) gross domestic product will fall by $5,000 B) gross domestic product will fall by $ 10,000 C) gross domestic product will increase by $5,000 D) gross domestic product will increase by $ 10,000
Which statement most accurately defines economics?
A) Economics is the study of how people make money. B) Economics is the study of how people make choices to satisfy their wants. C) Economics is the study of values a society should choose. D) Economics is the study of how to eliminate scarcity.
When a $500 check is cleared from Bank A to Bank B, it does not change the money supply, because:
a. Actually, it reduces the money supply. b. Actually, it increases the money supply. c. Because one individual's checking deposit falls and another individual's rises. d. Because funds are transferred from one loan account to another. e. These funds are temporarily "out of circulation" until the ultimate owner of the funds deposits them.
Suppose the price of banana rises over time and consumers respond by buying fewer bananas. This situation contributes to which bias in the consumer price index?
A. substitution bias B. transportation bias C. quality bias D. indexing bias