Asked by Melissa Borrero on May 30, 2024
Verified
A call option contract:
A) Obligates both the buyer and the seller.
B) Obligates the buyer but not the seller.
C) Grants rights to the buyer and obligates the seller.
D) Grants rights to the seller and obligates the buyer.
E) Grants rights to both the buyer and the seller but does not obligate either party.
Call Option Contract
An agreement in finance that grants the individual holding it the freedom, but not the duty, to buy various assets like stocks, bonds, or commodities at a fixed price before the deadline expires.
Buyer
An individual or entity that purchases goods or services from another party.
Seller
An individual or entity that is offering a product or service for sale.
- Understand the operational mechanisms and strategic uses of options in financial markets.
Verified Answer
ZK
Zybrea KnightJun 03, 2024
Final Answer :
C
Explanation :
A call option contract grants the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period, while the seller of the call option is obligated to sell the asset at the specified price if the buyer decides to exercise the option.
Learning Objectives
- Understand the operational mechanisms and strategic uses of options in financial markets.