Purchasers of Share Options

question 15

Multiple Choice

Purchasers of share options

• A) have the right to buy or sell a certain number of underlying shares.
• B) own a financial asset with benefits of firm ownership.
• C) have the obligation to buy or sell a predetermined amount of shares at the strike price.
• D) have a claim on the profits of the firm issuing the underlying securities.

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Definitions:

Spot Rate

The current market price for immediately exchanging one currency for another.

Forward Contract

A binding financial agreement to buy or sell an asset at a predetermined future date and price.

Journal Entries

The foundation of the double-entry bookkeeping system, journal entries record all financial transactions in a company's accounting system.

Forward Contract

An individually tailored pact between two sides for the buying or selling of an asset at an agreed price on a future date.