SIE Exam Question 845: Answer and Explanation

Question: 845

A call is an option to __________ a specified number of shares of stock during a specified period at a specified price. A buyer of a call option expects the price of the underlying stock to __________.

• A. buy, fall
• B. buy, rise
• C. sell, fall
• D. sell, rise

Correct Answer: B

Explanation:

A call is an option to buy a specified number of shares of stock during a specified period at a specified price. A buyer of a call option expects the price of the underlying stock to rise.