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Basic Question 3 of 11

Which of the following statements about options and their underlying assets is FALSE?

A. The value of an option, in comparison to its underlying asset, has the potential of creating an arbitrage opportunity.
B. The owner of the option is legally required to engage in a transaction involving the asset.
C. The holder of a long position on an option is the only party with the right to initiate a transaction involving the asset.

User Contributed Comments 2

User Comment
Shaan23 Thought A was false too but guess not.
schweitzdm As did I.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

explain the exercise value, moneyness, and time value of an option

CFA® 2025 Level I Curriculum, Volume 5, Module 8.