The contract which gives the rights to holders to sell or buy the asset at specific time period rather than giving the obligation is classified as ___________?
Correct answer: A. option
- A. option
- B. contract
- C. obligatory contract
- D. non-obligatory contract
Explanation
An option gives its holder the right to buy or sell an asset at a specified price or time, without imposing an obligation to act. This distinguishes it from a compulsory or obligatory contract.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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