Asked by Emalie Saalsaa on May 08, 2024
Verified
Which of the following best defines an expiration date?
A) A bond that can be exchanged for a fixed number of shares of stock for a specified amount of time.
B) An option granted to an employee by a company giving the employee the right to buy shares of stock in the company at a fixed price for a fixed time.
C) An option that can be exercised only on the expiration date.
D) The act of buying or selling the underlying asset via the option contract.
E) The last day on which an option can be exercised.
Expiration Date
The last day on which an option or futures contract is valid or can be exercised.
Option
A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price within a specific timeframe.
Exercised
In financial terms, refers to the act of utilizing the rights provided by a derivative contract, such as executing a buy or sell order under the terms of an option contract.
- Comprehend the significance of the expiration date and the timing of exercising options, as well as their effects on making financial choices.
Verified Answer
JM
Jabaar MohamudMay 10, 2024
Final Answer :
E
Explanation :
An expiration date in the context of options trading is the last day on which the option can be exercised. After this date, the option contract becomes void and the holder cannot exercise the option.
Learning Objectives
- Comprehend the significance of the expiration date and the timing of exercising options, as well as their effects on making financial choices.