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Investing for Organizational Sustainability

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chapter nine • introduction to options<br />

Question four<br />

What are put options?<br />

a. An option to buy at an agreed-upon price.<br />

b. An option to sell at an agreed-upon price.<br />

c. An option that is the opposite of a short position.<br />

d. The ability to lock in a purchase price.<br />

Question five<br />

What do writing covered calls enable an investor to do?<br />

a. The writer has the ability to buy on margin.<br />

b. The buyer owns the underlying asset.<br />

c. The buyer can per<strong>for</strong>m the agreement without incurring further risk.<br />

d. The writer can make easy money<br />

question six<br />

What does volatility mean <strong>for</strong> an investor?<br />

a. A measurement of price momentum<br />

b. Prices are falling.<br />

c. Prices are rising.<br />

d. Potential risk and uncertainty.<br />

Question seven<br />

What is implied volatility?<br />

a. A risk probability equation.<br />

b. A measure of how risk could occur.<br />

c. A calculation that compares the current market price<br />

and theoretical future value.<br />

d. Something that only impacts option writers.<br />

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