An Option Gives the Buyer

question 17

Multiple Choice

An option gives the buyer

• A)The right but not the obligation to undertake the trade specified in the contract at maturity.
• B)The obligation but not the right to undertake the trade specified in the contract at maturity.
• C)The right to cancel the contract at any time prior to maturity.
• D)The same obligation as in a forward contract.

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Definitions:

Net Loss

The amount by which expenses exceed revenues, indicating that a business spent more than it earned during a period.

End-of-period Spreadsheet

An end-of-period spreadsheet is a tool used in accounting to compile all account balances at the end of a reporting period for review and adjustment.

Common Stock

Common Stock denotes an equity interest in a corporation, providing voting rights and entitling the holder to a share of the company’s success through dividends and capital appreciation.

End-of-period Spreadsheet

A comprehensive worksheet that summarizes all accounts and balances at the end of an accounting period to facilitate the preparation of financial statements.