If You Pay $1000 for a 90-Day Option on Property

question 143

Multiple Choice

If you pay $1000 for a 90-day option on property offered at $200,000, which of the following is true?

• A) You have bought a 90-day period of time within which you may or may not accept the offer of the land.
• B) The seller of the land can revoke the offer of the land any time before acceptance.
• C) With the signing of the option agreement, you have entered into two contracts a contract for time and another for land.
• D) If you do not exercise the option, you can get your $1000 back.
• E) You have agreed that you will accept the offer of land within the 90-day period.

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Definitions:

Futures Contracts

Legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Spot Price

The current market price at which a particular asset can be bought or sold for immediate delivery.

Arbitrage Opportunities

Situations where a trader can make a profit from the price difference of a security or commodity in two different markets without risk.

Spot Price

The current market price at which a particular asset, such as a commodity, currency, or security, can be bought or sold for immediate delivery.