The right to buy a stock at a specific price for a specific period of time is called a:
A)Futures contract
B)Forward contract
C)Stock option
D)Forward option
E)None of the above

Question

Quizplus · Accepted Answer

This describes a stock option, which gives the holder the right to purchase or sell a stock at a specific price within a specific time frame. A futures contract is an agreement to purchase or sell a commodity or financial instrument at a specific price and time in the future, while a forward contract is a similar agreement but is customized between two parties. A forward option is not a common financial term.

The Right to Buy a Stock at a Specific Price