A Contract Between Two Parties to Either Purchase or Sell

question 66

Multiple Choice

A contract between two parties to either purchase or sell shares at a fixed price is referred to as a:

• A)stock dividend.
• B)stock option.
• C)contract option.
• D)employment option.

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Definitions:

Market Prices

Market Prices refer to the current price at which an asset or service can be bought or sold in a particular market.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation or a creditor relationship with a government or corporation.

Perpetuity

An annuity that pays a constant stream of cash flows indefinitely.

Duration

An indicator of how a bond or debt security's price is affected by interest rate fluctuations, usually stated in terms of years.