In an Option Contract,_____

question 43

Multiple Choice

In an option contract,_____.

• A) a separate contract for the limited purpose of holding the offer open is created
• B) the offeree is bound to accept the offer
• C) a joint contract is created for the limited purpose of keeping the offer open
• D) the offeree has purchased the right to accept within the stated period

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Definitions:

Competitive Industry

A Competitive Industry is characterized by many producers and consumers with the products being largely similar, leading to minimal ability for firms to set prices higher than market rates.

Long-Run Equilibrium

is an economic condition where all inputs and outputs in a market are fully adjusted to any changes, leading to a stable state of operations over time.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Competitive Return

The earning or return that an investment generates, over and above the risk-free rate, due to its competitive advantage.