An option premium is
A) paid by the short to the long as soon as the option is purchased.
B) paid by the long to the short as soon as the option is purchased.
C) paid by the long to the short when the option is exercised.
D) paid by the short to the long when the option is exercised.
B
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A person who lives in a good-climate city says, "It's expensive to live here, but at least the climate is free." In terms of a theory advanced in the textbook, this person has either forgotten or is unaware that
A) New York City is not a good-climate city and it is expensive to live there. In other words, not all good-climate cities are expensive and not all bad-climate cities are cheap. B) part of the reason it's expensive to live in the city is because of the good climate. C) good-climate cities have more outdoor entertainment entities and activities and therefore people have to pay higher taxes to support those entities and activities. D) there is a sunshine tax in most of the country - the more hours of sunshine a day, the higher the tax. E) none of the above
A rise in the federal funds rate _________ reserves and _________ the quantity of deposits and bank loans created.
Fill in the blank(s) with the appropriate word(s).
Suppose the price of A increases by 10 percent while the quantity demanded of B does NOT change. We would conclude that
A) the two goods are substitutes, but the cross elasticity of demand is not large. B) the two goods are complements, but the cross elasticity of demand is not large. C) the two goods are perfect substitutes. D) the two goods are not related.
Fiscal policy refers to
A. the techniques used by a business firm to reduce its tax liability. B. the behavior of the nation's central bank, the Federal Reserve, regarding the nation's money supply. C. the government's ability to regulate a firm's behavior in the financial markets. D. the spending and taxing policies used by the government to influence the economy.