A contract giving the owner the right, but not the obligation, to buy or sell an asset at a specified price any time during a specified period in the future is referred to as a(n)
A) interest rate swap.
B) forward contract.
C) futures contract.
D) option.

Question

Quizplus · Accepted Answer

A contract that gives the owner the right, but not the obligation, to buy or sell an asset at a specified price any time during a specified period in the future is an option. Interest rate swaps involve the exchange of cash flows based on different interest rates, forward contracts and futures contracts are agreements to buy or sell an asset at a specific time in the future at a specified price.

A Contract Giving the Owner the Right, but Not the Obligation