As interest rates increase,the writer of a bond call option stands to make
A)limited gains.
B)limited losses.
C)unlimited losses.
D)unlimited gains.

Question

Quizplus · Accepted Answer

The writer of a bond call option can make limited gains, which is the premium received for writing the option. The potential losses can be significant if interest rates decrease, but the gains are capped at the premium received.

As Interest Rates Increase,the Writer of a Bond Call Option