Question

What is the main characteristic of options contracts regarding the buyer's obligation?

a.

The buyer has the obligation to buy the underlying asset.

b.

The buyer has the obligation to sell the underlying asset.

c.

The buyer has the right, but not the obligation, to buy or sell the underlying asset.

d.

The buyer has no rights or obligations.

Answer: (c).The buyer has the right, but not the obligation, to buy or sell the underlying asset. Explanation:Unlike a forward contract, the buyer of an options contract has the right, but not the obligation, to buy or sell the underlying asset at the agreed price on or before the specified period of time.

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Q. What is the main characteristic of options contracts regarding the buyer's obligation?

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