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    Question

    The losses of option buyer are

    -
    A Unlimited Correct Answer Incorrect Answer
    B Limited to the price of the option Correct Answer Incorrect Answer
    C Can be twice the option price Correct Answer Incorrect Answer
    D Generally less than the option price Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    In the worst scenario the holder of the option will not exercise the option and forgo the price paid for the option. Therefore, the maximum loss is the price of the option.

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