All of the following are true of calls and puts EXCEPT
A) the presence of options trading in the firm's stock could, by increasing trading activity, stabilise the firm's share price in the marketplace.
B) the financial manager of a company has very little need to deal with options.
C) options are issued by businesses.
D) options are not a source of funding to the corporation.

Question

Quizplus · Accepted Answer

Options are not issued by businesses themselves; they are financial instruments traded on exchanges or over-the-counter, created by market participants. Companies issue stocks and bonds for funding, but options are derived from these underlying assets and are created by investors.

All of the Following Are True of Calls and Puts