Which of the following statements about put and call options is false?
A) They are a form of deferred equity financing by the firm.
B) They provide the buyer with an opportunity to earn larger returns than simply buying or selling ordinary shares.
C) They can be used to lock in a gain or prevent a loss on a shareholding.
D) They are traded on organized exchanges.

Question

Quizplus · Accepted Answer

Put and call options are not a form of deferred equity financing by the firm; rather, they are contracts between two parties (buyer and seller) that give the buyer the right (but not the obligation) to buy or sell underlying securities at a predetermined price and time in the future.

Which of the Following Statements About Put and Call Options