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      Basics of Options Quiz #3 on QuizRevolution


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      Newest Quiz: Basics of Options Final Exam

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      Basics of Options Quiz #3

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      Basics of Options Quiz #3
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      When someone buys the right to a stock with an option, they are obligated to buy the stock
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      • True

      • False

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      Comments:
      1. When someone buys the right to a stock with an option, they are obligated to buy the stock
        1. True
        2. False
        1. False: An option gives the buyer the right but not the obligation to buy a stock

      2. With his $30 stock option Joe benefits if
        1. Microsoft shares begin selling for $2
        2. Bill Gates leaves on vacation
        3. Microsoft shares move down to $25/share
        4. Microsoft share spike to $45/share
        1. In our story Joe bought the right to buy Microsoft at $30/share. If the stock moves higher he will benefit greatly.

      3. When Microsoft stock fell in price
        1. Joe was still obligated to buy it for $30
        2. Joe was able to buy it for $20 instead of $30
        3. Joe was able to walk away without any consequences
        4. I do not know, I need to read the class again
        1. When Microsoft stock fell in price Joe had no obligation to buy the stock for $30. He simply moved on with his life and was very happy he did not purchase for $30/share.

      4. Stock Options give the buyer the Right but not an Obligation
        1. True
        2. False
        1. True: Stock Options give the buyer the Right but not the Obligation to buy or sell a specific stock for a specific price on or before a specific date.

      5. Because he bought an option
        1. Joe avoided paying too much for the stock
        2. Joe got stuck with a stock he did not want
        3. Neither one of these are true
        4. I am confused
        1. Because Joe thought Microsoft was going to go up in value he bought an option, he had the right to buy Microsoft for $30/share. But when the stock moved down instead of up Joe was glad he had not spent $30/share. He avoided that costly mistake.

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