Ask Question
11 May, 14:36

The purchase of a call has what advantage over buying the underlying security?

A. Lower capital requirement.

B. The call holder receives the same dividend as does the holder of the underlying stock.

C. The call holder does not lose time value as the position is held.

D. The call holder has a larger gain potential in a rising market.

+2
Answers (1)
  1. 11 May, 14:40
    0
    A. Lower capital requirement.

    Explanation:

    A call option gives the buyer the right to purchase the underlying asset at the strike price at any time before the expiry date (and the seller is obligated to deliver the underlying asset at the strike price). As they demand a less capital investment than equities so are less risky and have the potential to deliver higher percentages of returns.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The purchase of a call has what advantage over buying the underlying security? A. Lower capital requirement. B. The call holder receives ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers