n NISM Certifications
NSM General NISM
Medium

An option is ________, if on exercising it, the option buyer gets negative cash flow.

Practice question from NISM Series IV - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    In the money

  2. Out of the money

    Correct answer

  3. C

    At the money

  4. D

    None of the above

Why this is the answer

Out-of-the-money options result in negative payoff if exercised.

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