Which of the following is true about an option contract?

Question

Quizplus · Accepted Answer

Option contracts are unique in that they provide the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time frame. The key feature of an option contract is that once the option fee is paid, the offeror cannot revoke the offer during the option period, making choice D correct. Choices A, B, and C are incorrect because: A) the money paid for an option is typically non-refundable if the offeree decides not to exercise the option; B) the consideration paid for the option often does apply to the purchase price if the option is exercised; and C) an option contract is generally not terminated by the death or incompetency of either party, as it is a binding contract that can be enforced by or against the estate or representatives of the deceased or incompetent party.

Which of the Following Is True About an Option Contract