Simon Believed That He Might Want to Buy Shares in Omega

question 70

Multiple Choice

Simon believed that he might want to buy shares in Omega Inc from Melinda in the future.Each Omega share was worth $10 on June 1.On that same day, Simon paid Melinda $1000 in exchange for an option to purchase 5000 Omega shares, at $10 per share, on or before October 1.Which of the following statements is TRUE?

• A)If the market value of the shares immediately dropped to $5 each and stayed there throughout the option period, Simon would be obligated to buy 5000 shares from Melinda at double their actual value.
• B)If the market value of the shares immediately increased to $20 each and stayed there throughout the option period, Melinda might be obligated to sell 5000 shares to Simon at half of their market value.
• C)If the market value of the shares immediately increased to $20 each, Melinda could revoke her offer to sell the shares any time before Simon accepted it.
• D)The option would not create any enforceable obligations unless and until Simon agreed to buy the shares.
• E)Simon will be entitled to enforce the option only if Melinda cannot find any other potential buyers for the Omega shares.

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Definitions:

Precautions

Measures taken in advance to prevent harm or secure good outcomes.

Tort

A civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act.

Good Samaritan Statutes

Laws that provide legal protection to individuals who voluntarily offer assistance to others in distress.

Liability

The condition of having legal accountability, particularly relating to debts or legal duties.