An option based on an underlying asset such as a building or land is called a _____ option.

Question

Quizplus · Accepted Answer

A real option refers to an option contract based on a tangible asset such as a building or land. This is because it has a physical presence and can be bought, sold or leased. Financial options, on the other hand, are contracts based on financial securities, such as stocks or bonds. Liquid options refer to contracts that can be easily bought or sold, while fixed options have predetermined terms such as an expiration date.

An Option Based on an Underlying Asset Such as a Building