If an Investor Wants to Acquire the Right to Buy

question 21

True/False

If an investor wants to acquire the right to buy or sell an asset, but not the obligation to do it, the best instrument is an option rather than a futures contract.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, giving them a right to a portion of the company's profits and assets.

Limited Liability

A legal structure that restricts the amount of money that owners or shareholders can lose in case the company fails, limiting their loss to the amount they have invested in the company.

Direct Management

The process of overseeing and directly controlling operations or tasks without intermediary levels of command.

Charter

A legal document that establishes a corporation or other organization, outlining its purpose, activities, and rights.