16) What is the maximum potential loss for a seller of a call option?
a) The premium received for the option
b) The strike price
c) Unlimited
d) Zero
Answer: c) Unlimited
17) What is the maximum potential loss for a buyer of a put option?
a) The premium paid for the option
b) The strike price
c) Unlimited
d) Zero
Answer: a) The premium paid for the option
18) What is the maximum potential loss for a seller of a put option?
a) The premium received for the option
b) The strike price
c) Unlimited
d) Zero
Answer: b) The strike price
19) What is an options contract?
a) A contract to buy or sell an asset at a specific price on a future date
b) A contract to borrow money
c) A contract to invest in stocks
d) A contract to hedge against risk
Answer: a) A contract to buy or sell an asset at a specific price on a future date
20) True or False: Options contracts are traded on organized exchanges, similar to futures contracts.
Answer: True
