An American Call Option Grants the Holder the Right To

question 2

Multiple Choice

An American call option grants the holder the right to:

• A)sell the underlying security at the strike price on or before the expiration date.
• B)sell the underlying asset at the strike price only on the expiration date.
• C)buy the underlying asset at or below the exercise price on or before the expiration date.
• D)buy the underlying asset at the exercise price only on the expiration date.
• E)buy the underlying security at a stated price on or before the expiration date.

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Definitions:

Disaffirmance

The legal act of rejecting or voiding a contract or agreement, especially by one party who was a minor at the time of entering the contract.

Age of Majority

The legally recognized age at which an individual is considered an adult and can engage in civil activities without parental consent.

Legally Binding

Refers to agreements or promises that have legal force and can be enforced by law.

Capacity

The legal ability to enter into a binding contract.