Which of the Following Describes a Call Option

question 3

Multiple Choice

Which of the following describes a call option?

• A) The right to buy an asset for a certain price
• B) The obligation to buy an asset for a certain price
• C) The right to sell an asset for a certain price
• D) The obligation to sell an asset for a certain price

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Definitions:

Units-Of-Production Method

A depreciation method that allocates an asset’s cost based on its usage, productivity, or units produced, rather than the passage of time.

Double Declining-Balance Method

A method of accelerated depreciation that doubles the straight-line depreciation rate, reducing the asset's book value more quickly in its early years.

Double Declining Balance

An accelerated method of depreciation which doubles the rate at which an asset is depreciated compared to the straight-line method.

Straight-Line Method

This approach spreads the cost of a fixed asset evenly over its expected productive life, ensuring a consistent depreciation expense each year.