The Opportunity, but Not the Obligation, to Buy a Security

question 98

Multiple Choice

The opportunity, but not the obligation, to buy a security within a specified period of time at a guaranteed price is

• A) A call option.
• B) Direct investing.
• C) Buying on margin.
• D) A put option.
• E) A short sale.

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Definitions:

Market Value

Today's market rate for the purchase or sale of services or assets.

Flotation Cost

Costs a company faces when it issues new securities, encompassing fees for underwriting, legal services, registration, and printing.

WACC

A measurement called the Weighted Average Cost of Capital assesses the cost of a business's capital, where every capital category is assigned a proportional weight.

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.