An Option That Gives the Owner the Right to Buy

question 32

Multiple Choice

An option that gives the owner the right to buy a financial instrument at the exercise price within a specified period of time is a(n) ________.

• A) call option
• B) put option
• C) American option
• D) European option

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Definitions:

Fixed Costs

Charges that stay the same no matter the scale of production or sales, like rent, salaries, and insurance.

Variable Costs

Expenses that vary depending on the amount of products or services a company generates.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in total with changes in activity level but not in the same proportion.

Variable Costs

Expenditures that adjust in alignment with production levels or sales quantities, notably including labor and raw materials.