The market that is a zero-sum game is the
A) common stock.
B) preferred stock.
C) options.
D) Treasury bill.

Question

Quizplus · Accepted Answer

Options are a type of financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a fixed price (strike price) on or before a predetermined date. The value of the option depends on the price movement of the underlying asset. One party gains while another party loses, resulting in a zero-sum game. Common and preferred stocks are not a zero-sum game as both parties can gain from ownership. Treasury bills are also not a zero-sum game as the government guarantees a fixed rate of return.

The Market That Is a Zero-Sum Game Is the