Question

___________ are where two parties agree to a trade in the future but one party retains the right to opt out of the trade.

a.

Futures

b.

Forwards

c.

Options

d.

Swaps

Answer: (c).Options Explanation:Options are financial instruments where two parties agree to a trade in the future, but one party retains the right to opt out of the trade. The party holding this right is referred to as the option holder or buyer, while the other party is the option writer or seller. Options provide flexibility for the buyer to choose whether or not to proceed with the trade, depending on market conditions and their desired outcome. This distinguishes options from futures and forwards, where both parties are obligated to fulfill the trade at a specified future time.

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Q. ___________ are where two parties agree to a trade in the future but one party retains the right to opt out of the trade.

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