SIE Understanding Products and Their Risks Practice Question 9
Question: 9
Which of the following is true of an option?
Correct Answer: B
Explanation:
B: The writer (or seller) is obligated to fulfill the option. Choice A is incorrect because the holder (or buyer) has no obligation to execute the option. Choice C is incorrect because the issuer is typically not involved in the initiation of an option. Choice D is incorrect because the Options Clearing Corporation, not the Securities Exchange Commission, guarantees all options traded on U.S. exchanges.
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