Which of the following best defines an option?
A) The lower bound of an option's value, or what the option would be worth if it were about to expire.
B) A contract that gives its owner the right to buy or sell some asset at a fixed price on or before a given date.
C) The value of a convertible bond if it could not be converted into common stock.
D) The right to sell an asset at a fixed price during a particular period of time. The opposite of a call option.
E) An option with payoffs in real goods.

Question

Quizplus · Accepted Answer

An option is a financial contract that gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price before or on a specific expiration date.

Which of the Following Best Defines an Option