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The seller of an option has the ____ to buy or sell the underlying asset, while the
purchaser of an option has the ____ to buy or sell the asset.
A) obligation; right
B) right; obligation
C) obligation; obligation
D) right; right
Answer: A
Diff: 2 Type: MC Page Ref: 334
Skill: Recall
Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
manage interest-rate and foreign-exchange risk
An option that can be exercised at any time up to maturity is called a(n) ____.
A) swap
B) stock option
C) European option
D) American option
Answer: D
Diff: 2 Type: MC Page Ref: 334
Skill: Recall
Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
manage interest-rate and foreign-exchange risk
An option that can be exercised only at maturity is called a(n) ____.
A) swap
B) stock option
C) European option
D) American option
Answer: C
Diff: 2 Type: MC Page Ref: 334
Skill: Recall
Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
manage interest-rate and foreign-exchange risk
Options on individual stocks are referred to as ____.
A) stock options
B) futures options
C) American options
D) individual options
Answer: A
Diff: 2 Type: MC Page Ref: 334
Skill: Recall
Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
manage interest-rate and foreign-exchange risk