Which of the following statements concerning options are correct?
I. Options are derivative securities.
II. The value of an option is dependent upon the value of the underlying security.
III. The seller of the option retains the option premium whether or not the option is exercised.
IV. Options can provide leverage benefits.
A) II and III only
B) I, II and III only
C) I, II and IV only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

Options are derivative securities (I) whose value depends on the underlying asset (II). The seller keeps the premium regardless of exercise (III), and options can offer leverage (IV).

Which of the Following Statements Concerning Options Are Correct