An agreement that grants its owner the right, but not the obligation, to buy or sell a specific asset at a specific price

An agreement that grants its owner the right, but not the obligation, to buy or sell a specific asset at a specific price for a set period of time is called a(n) _____ contract.    A.  option B.  forward C.  futures D.  swap E.  spot Refer to section 23.6

12.	Sue recently purchased a right to buy 100 shares of ABC stock for $27.50 a share if she so chooses at any time within the next four months. Which one of the following does Sue own?    A.  futures contract B.  call option C.  put option D.  straddle E.  strangle Refer to section 23.6

13.

Steve recently sold an option that requires him to purchase 100 shares of Omega stock at $40 a share should the option owner decide to exercise the option. What type of option contract did Steve sell?    A.  futures option B.  call option C.  put option D.  straddle E.  strangle Refer to section 23.6

14.

Which one of the following can a firm do if it effectively manages its financial risks?    A.  eliminate all the risks faced by the firm B.  totally eliminate all financial risks C.  reduce the price volatility it faces D.  guarantee the firm's financial success E.  avoid all long-term financial risks Refer to section 23.2