FINRA SIE - Securities Industry Essentials Exam (SIE)

Buying a call option gives the investor the right to purchase the stock at a fixed price (strike price). If the stock’s price rises significantly, the value of the call option increases, allowing the investor to profit.

B is correct because a call option profits directly from a stock price increase.

A is incorrect because a put option profits from a stock price decline.

C and D are incorrect because selling options limits profit potential and exposes the seller to significant risk if the stock moves unfavorably.

The cooling-off period begins after the registration statement is filed with the SEC and lasts for at least 20 days. During this time, the issuer and underwriters can market the securities but cannot finalize sales.

D is correct because marketing (e.g., roadshows) is permitted during the cooling-off period.

A is incorrect because the final prospectus is distributed after the offering is effective.

B and C are incorrect because sales and deliveries are prohibited until the registration becomes effective.