An option that gives the owner the right to buy 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 call option gives the owner the right, but not the obligation, to buy a financial instrument at the exercise price within a specified period of time. A put option gives the owner the right, but not the obligation, to sell a financial instrument at the exercise price within a specified period of time. An American option can be exercised at any time before the expiration date, while a European option can only be exercised on the expiration date. Therefore, the best choice is A) call option, as it matches the description in the question.

An Option That Gives the Owner the Right to Buy