Which of the following types of financial instruments is a contract between a buyer and a seller in which the buyer has the right (but not the obligation)to buy an agreed quantity of a specified commodity or financial instrument at a certain time for a certain price.
A)Put option.
B)Call option.
C)Hedge.
D)Collateralized purchase option.

Question

Quizplus · Accepted Answer

A call option is a financial instrument that gives the buyer the right (but not the obligation) to purchase an agreed quantity of a specified commodity or financial instrument at a certain time for a certain price. In contrast, a put option gives the buyer the right to sell an agreed quantity of a specified commodity or financial instrument at a certain time for a certain price. A hedge is a strategy used to mitigate risks, which may involve the use of various financial instruments such as options. A collateralized purchase option is not a commonly used term in finance.

Which of the Following Types of Financial Instruments Is a Contract