An option that gives the owner the tight to sell a financial instrument at the exercise price within a specified period of time is a(n) ________.
A) call option
B) put option
C) American option
D) European option

Question

Quizplus · Accepted Answer

A put option gives the owner the right to sell a financial instrument, such as a stock, at a specified price within a certain period of time. This allows the owner to benefit from a drop in the price of the instrument, as they can sell it at the higher exercise price. A call option, on the other hand, gives the owner the right to buy a financial instrument at a specified price within a certain timeframe. American and European options refer to when the option can be exercised, with American options allowing for exercise at any time before the expiration date, while European options only allow for exercise on the expiration date. However, these distinctions do not change the fact that a put option is the best choice for the given scenario.

An Option That Gives the Owner the Tight to Sell