A Call Option Is an Agreement That

question 96

Multiple Choice

A call option is an agreement that:

• A)obligates both the buyer and seller to a future transaction.
• B)grants the seller the right to buy a security at a predetermined price.
• C)gives the buyer the right to purchase an asset at some point in the future.
• D)grants the seller the right, but not the obligation, to sell an asset.
• E)presets a price but not a time period.

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Definitions:

U-joint Cross

The central component of a universal joint, which allows for the transfer of rotary motion between misaligned shafts.

Spline

A series of ridges or teeth on a drive shaft that mesh with grooves in a mating piece, allowing torque to be transferred while permitting some axial movement.

Yoke

Any of a number of different fork-shaped components. Shift yokes (on shift rails) fit to dog clutches in a transmission to move them in and out of engagement. A pair of drive shaft yokes couple to each other using a U-joint as an intermediary.

Brinelling

Minor indentations on the shoulder or in the valley of a bearing race, usually caused by improper installation.