Describe why an investor might purchase a call-02171
This subjective question is related to the book/course
vu mgt613 Production / Operations Management.
It can also be found in
vu mgt613 Mid Term Solved Past Paper No. 1.
Question 1: Describe why an investor might purchase a call.
Answer:
A call option gives the holder the right to buy (or "call away") 100 shares of a particular common stock at a specified price any time prior to a specified expiration date. Investors purchase calls if they expect the stock price to rise, because (lie price of the call and the common stock will move together. Therefore, calls permit investors to speculate on a rise in the price of the underlying common stock without buying the stock itself.
