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Homework answers / question archive / Which of the following characterisation of a Call option is TRUE: A It is the right to buy an asset
Which of the following characterisation of a Call option is TRUE: A It is the right to buy an asset. B It is the obligation to sell an asset. C It is the obligation to buy an asset. D It is the right It is the right to sell an asset. E None of the above.
A call option is a financial contract which will give the option to the buyer, the right and not the obligation to buy the asset, at a specified price within a specific time period.
A call buyer will profit when the underlying asset increases in value
Going with the above option, the correct answer to the question is
Option A: the right to buy an asset
