One Distinction Between Futures and Options Contracts Is That ________

question 37

Multiple Choice

One distinction between futures and options contracts is that ________ to an option contract ________ to transact at a later date.

• A) one party; is not obligated
• B) both parties; are not obligated
• C) one party; is obligated
• D) both parties; are obligated

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Definitions:

Discounted

A reduction applied to a price or rate, lowering the original amount.

Simple Interest Rate

The percentage of the principal amount that is paid as interest for a specified period.

Contract

A contract that is recognized and can be enforced by law, formed between two or more participants.

Simple Interest

Simple Interest is a calculation of interest that does not take into account the effect of compounding. It is typically calculated by multiplying the daily interest rate by the principal amount and the number of days that elapse between payments.