SIE Exam Question 817: Answer and Explanation

Question: 817

Puts are an option to __________ a specified number of shares of stock during a specified period at a specified price. A buyer of a put option expects the price of the underlying stock to __________.

• A. buy, fall
• B. buy, rise
• C. sell, fall
• D. sell, rise

Correct Answer: C

Explanation:

Puts are an option to sell a specified number of shares of stock during a specified period at a specified price. A buyer of a put option expects the price of the underlying stock to fall.