A financial contract that provides its owner with the right,but not the obligation,to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n)________ contract.
A)option
B)futures
C)forward
D)swap
E)straddle

Question

Quizplus · Accepted Answer

An option contract is a financial instrument that gives its owner the right, but not the obligation, to buy or sell a specific asset at a predetermined price on or before a specified date. This differs from a futures contract, which obligates both parties to buy or sell an asset at a future date regardless of market conditions. A forward contract is similar to a futures contract but is privately negotiated between two parties rather than traded on an exchange. A swap is another type of financial contract that involves the exchange of one asset for another asset or a series of cash flows. A straddle is an options trading strategy that involves buying both a call option and a put option on the same underlying asset.

A Financial Contract That Provides Its Owner with the Right,but