The Right to Buy a Given Quantity of an Underlying

question 74

Multiple Choice

The right to buy a given quantity of an underlying asset at a predetermined price on or before a specific date is called a(n) :

• A) put option.
• B) option writer.
• C) call option.
• D) arbitrage contract.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Contra Asset Account

An account that is used to reduce the balance of a related asset account to reflect its adjusted carrying value.

Credit Balance

The amount that a company or individual owes to creditors; in accounting, it indicates a balance on the right side of a ledger for liability, revenue, or equity accounts.